I assumed that the legendary Japanese swords would be a little tougher than that.
That's the thing with legends. They are often a very idealized version of reality.
I once had a conversation with the legendary (hah!) Doc Price. He told me that the Japanese sword is in fact rather inferior if you look at it objectively.
Cutting with a sword is difficult. Swinging is easy enough, but when you make contact, the cutting edge has to be EXACTLY in the plane of the swing, and stay in that plane through the cut. If you twist even a little, the sword will flip more towards the flat of the blade. This creates a significant sideways force. Because the spine of the sword is much softer than the edge, the sword is likely to take a set. And if the sword twists after contact, it is also possible to snap a chip out of the edge.
Now a water bottle is probably safe enough to cut. But if an untrained person like me would attempt to cut a traditional straw mat, chances are good that I will damage the sword. Many people think that folding the steel will give it magical properties, but it's really a way to transform dirty nuggets of raw steel and slag into a more or less homogenous bar of steel. From a metallurgical pov, the very best folded tamahagane would approximate a simple bar of 1075. Note that this sword is 1086M, not tamahagane or something else.
Howard also makes swords from L6 steel, and he has developed a secret process for hardening. The edge is still martensite, but the body of the blade is not soft pearlite. Instead it is bainite. Much tougher and less ductile. Those L6 will stand up to abuse much better. If we were to think of legendary swords, those L6 swords would be the closest.
Now, I don't want to imply that every bad cut should end badly. It is entirely possible that if I don't mess up too badly, the sword will be fine. It is after all, steel, not paper mache. However, I bought the sword from Howard when I was still doing Japanese martial arts and I was planning to use this instead of a soulless iaito. the entire process took so long that I only got the sward after I've already quit for several years. So now I have it purely for appreciation of the craftsmanship.