Best advice to work around it is to put scotch tape over it, then cut out around it with an x-acto knife. Leave tape over the etch, and just polish with your dremel the areas exposed. The tape should help protect the etch if your buffing wheel runs over it a bit, but try not to buff the tape.

If you really have major damage, you can redo all the work, but it takes effort. my train of thought on this would be to take some very good photos of the etching, then reproduce the picture/touchup-with-photoshop on the computer. You'd be going for a black & white image. This image can then be transferred to a stencil like for the etch-o-matic and etched back onto the blade. The etch-o-matic does about 1"x3" stencils, which should definitely cover all the work on the blade. If there's goldwash too, you could hand paint back on the gold with something like the plug-n-plate systems. You'd basically get it back to looking like new or better, but at significant effort and cost. The etch-o-matic starts at $50, and the plug-n-plate gold will be another $50. So ask yourself is it worth it to have that pretty design on there, or not?