To shape the handle, you just need a rasp and a file. I also use a rattail file a little on my arrow rest.
You have a lot of freedom with how you shape your handle, so I'm just going to tell you what I did and why I did it. First of all, I decided to cut an arrow rest 1.25 inches above center. You can do this with a little hand saw, a jig saw, or whatever. I cut mine for a left-handed shooter, because the only other time I've made a left-handed bow, it was an accident. Left-handed people are always complaining about people putting the arrow rest on the wrong side, and I'm sure I can find somebody who will want this bow.
I haven't always done this, but I like to round my fades a little. I used to leave them square as they went into the limb. Now I round them purely for aesthetic reasons. I think it looks better than squared fades.
Since cedar isn't the strongest wood in the world, I didn't cut the arrow rest all the way to the middle. I did cut it where the wood is at its thickest, though. You don't want to cut it into your fades. I start near the fades and gradually get deeper as I move to the thicker wood on the handle.
There are a couple of advantages to cutting an arrow rest. First, it gives you a consistent place to rest the arrow, which makes it easier to shoot. Second, it means the arrow doesn't have to bend so far around the bow, and that allows you to use a wider range of arrow spines and still have good flight.
But you don't have to cut an arrow rest if you don't want to (or can't because you don't have a saw). If you don't want to cut an arrow rest, I would highly recommend giving the "floppy rest" a try.
It's easy to make and just uses a little piece of leather. They work great. You might want to narrow your handle some before using it, though.
Here's another look at my arrow rest.
See how I've got the arrow rest radiused? That is, curved? That helps arrow flight in two ways. First, when the feather hits the rest, it isn't stopped all of a sudden. Rather, it's gradually collapsed as it gets smoothed down. Look at the front view again above. I've got the arrow shelf sort of rounded on the verticle and horizontal so that the feather has an easier time going through.
Second, a radiused shelf reduces drag on the arrow, because there is less contact between the arrow rest and the arrow than there would be if the shelf were flat. Now of course you can't cut an arrow shelf like that with a saw. You have to cut it square and then use your rasp and file to get the shape you want. Here's how I do it, though:
There's also a reason I have the handle contoured. Contouring is not necessary, but it does two things. First, it makes the bow more comfortable to hold and shoot. Second, it helps with consistency. Your hand will always grab the bow in exactly the same spot since the handle is contoured. Consistency will improve your shooting.
Speaking of comfort, don't forget to round the back of the handle, too.
Having it round all the way around makes it a lot more comfortable to hold. But like I said earlier, you have a lot of freedom with the shape of your handle. Do whatever you want.
The next step is shooting the bow. Of course a lot of us can't resist the urge to shoot them before we even finish tillering. Whether you do that or not, you really ought to shoot it at this point. I shoot it before I finish the nocks. That way, I don't get wax and colour in the nocks with the string before I put the finish on it.
If this if your first bow, you're in for a thrill. Shooting a bow for the first time that you made yourself is wildly exciting!
The question is how you're going to do it if you live in an apartment. I got a cheap styrofoam target from Wal Mart, and I sometimes shoot it in the apartment. I can stand in my living room, shoot down the hall into my bedroom, and hit the target on the opposite wall. I only have two holes in my wall. :-) Be careful.
Sometimes, I take my target outside in an open space and shoot. So far, nobody seems to mind. You have to watch out for pedestrians, though. It's much easier to have a friend with a big back yard who doesn't mind you shooting. Or, if you live out in the sticks, lucky you!
Shooting the bow was a bit awkward since I'm right handed. I gave up trying to shoot it left handed and just shot it off my hand right handed. It flings arrows just fine, but it's got some hand shock. Narrower tips and a heavier riser would've helped that a little. It also smacked my wrist pretty hard. I may raise the brace a little to help with that, but there's always an arm guard.
Nocks are another area of freedom. You can get ideas by just searching the internet and looking at pictures of what other people have done. Here's mine.
There's only one design consideration. See how I sort of smoothed out the notch on the tip? That's to allow the string more freedom to move as I draw the bow.
If you want, you can glue on tip overlays. Tip overlays will allow you to narrow the tips a little more which will speed up the bow imperceptively and reduce hand shock a little.
The next step is sanding. Don't sand the backing. I start with 100 grit sand paper. I use enough of it to get all the tool marks out. Once I'm satisfied that all the tool marks are out, the rest of the sanding goes more quickly. I used 220, then 320, then 400, then 600. After 600, it was pretty smooth. You can get that really fine sand paper at auto parts stores. You can get 1000 grit if you want.
Some people like to wipe the whole bow down with a wet cloth. That causes the grain to rise, and when it dries, it feels all hairy. But then when you sand it back down, it gets really smooth.
To sand the nocks, I wrap the sand paper around the rattail file and pretend to file nocks with it.
Once it's all sanded, I wipe it down with a t-shirt to get all the dust off of it. Red oak is kind of pourous, so if you want, you can wipe it down with acetone, and that will get some of the dust out of the pours.