I've been to the Williamsburg gun shop. I first heard there that most of the steel cutters were made from worn-out files, annealed, cut, forged, filed to shape, then re-hardened and stoned. Files in colonial America were almost always imported from Sweden or England. I've since read that same thing in several places. The steels used for making these files are said to have been pretty good, from the hardness standpoint.
I've always assumed that the old handmade barrels were octagon because that was easier to hand-forge and hand-finish (by draw filing) than a round barrel would be.