I normally drill my handles on the lathe as a first step(I might rough them down first but not always). I then centre the blank using the hole as a centre point, this ensures the fitted blade is parallel to the handle.
For tangs that are not round I will drill a hole slightly smaller than the o/a width of the tang decreasing in size the deeper it gets. I split turn tapered wedges and glue them in place, one either side of the tang.
As MCB stated a good ferrule is best.
As regards length of the handle that depends on what the tool will be used for. If it is a hollowing tool you want the handle fairly long for a skew I wouldn't make the handle longer than the blade.(Unless you are in to bodging or mill wrighting when I believe longer handles are preferred)
When fitting the handle position the blade in the hole and hit the end of the handle with a mallet, don't be tempted to rest the end on the bench and drive it home or you could damage the blade. You will feel when it is fully home.
I don't like heating the tang and burning it in, I am not a metallurgist so do not understand the damage I can do to the blade by heating to an uncontrolled temperature and also if you burn the insides of the handle you will harden the timber and so reduce the holdability (?)of the timber.I feel that there is also the chance that internal splits may occur so this goes against the grain(no pun intended) for me as we all try carefully to avoid heat checks in our work.
If you end up turning a nice handle but the hole is too big drill the hole larger and turn a plug to fit snugly and then glue it in and start the hole again once the glue has dried. If you have arthritis or hand problems you might like to turn the handle slightly over diameter, this may make them more comfortable to use over long periods.
hope this helps
Regards
John BHT