I really appreciate your comprehensive thoughts on this, TurboScooter!
I didn't phrase it well when I said "to appropriately show my appreciation with" so I understand your perception. I think I was originally under the impression that -san was a term of endearment, perhaps only used with close friends. I felt this would be too forward in my case. Yet, I also understood that not using -san was considered rude. If you speak Spanish (I do just a very little bit), I had incorrectly equated it to using "tú" (i.e. -san) vs "usted" (i.e. not using -san). This quote will illustrate where I was coming from:
When speaking to children, family members, intimates and companions, use the familiar form. When speaking to strangers and people to whom you are deferential (bosses, teachers, police, etc.) use the formal form. This is true for many languages that make this distinction. Choosing between "usted" and "tú" can be tricky. It depends on social context, and varies somewhat from one region to another, as well as from one social group to another. But as a general rule of thumb, if you think you would address a person in English as, "Sir", "Ma'am", "Mr. Smith", or "Ms. Jones", then you should probably use "usted" with that person. If you're on a first name basis with a person, you should probably use "tú". But pay attention to what people around you are using, because customs do vary. When in doubt, you're less likely to cause offense by using "usted", so that's the safe bet.
Ah, I certainly didn't know this and have even seen "Shinichi-san" used here on the forum. These gentlemen sign their email with "Regards, Koki" or "Regards, Shin", and I have been calling them by their first names until now - would it seem unusual to change to Iwahara-san and Watanabe-san? Of course in English, if you were calling someone by their first name then switched to calling them "Mr. Last Name", this would be unusual, but I gather -san isn't exactly the same as "Mr.".
I understand this - Mr. First or Mr. Last - being ok if our positions were reversed. (I'm just old enough to be offended if a young child addresses me by only my first name vs Mr. Steve, but that's another topic...)
Again, what is difficult for me is that there doesn't seem to be an exact parallel to -san in English, and without social cues and direct exposure to the culture it's difficult to arrive at a feel for what it is I may actually be calling someone! So this is where I stand:
-san =/= endearment (e.g. "Koki-dear")
-san =/= reverence (e.g. "Koki-highness")
-san == base civility (e.g. "Mr. Watanabe"), but not exactly the same as "Mr."
Am I getting close?
English really doesn't have a direct translation; in this sense Japanese is probably more complex. The reason Mr./Mrs. doesn't really work as a direct translation is because -san is basically the default suffix for anyone's name. In situations where calling someone by their first name is perfectly normal in English you would still likely be calling this person -san in Japanese.
As a term of endearment you can kind of use an "inappropriate" honorific suffix. Generally speaking, the suffix -chan is used for girls, and -kun for boys. You will generally not be calling a grown man -kun, and even less likely -chan. But, depending on the relationship, you can indeed call a grown man -chan as a term of endearment. Using -chan with grown women can also be used as a term of endearment. Yobisute, while rude in most cases, is actually showing closeness when done appropriately. In the context of this conversation, though, you had it backwards (-san being a term of endearment, perhaps only used with close friends).
Japanese has "in group" and "out group" which is kind of like the familiar and formal, but it's probably more complex. For example, a friend of mine came to visit on vacation with her co-worker/friend. Well, they might be buddies hanging out on vacation (in group/familiar), but there's also a fairly large age difference between the two. So they both use -san with each other, but the younger uses Last Name -san and the older uses First Name -san. I think they might have also had a junior/senior (kouhai/senpai) relationship at work. It was several years back so I forget the details, but I'm pretty sure after a couple of days hanging out the friend asked, with a touch of uncertainty in her voice, if she could yobisute my name. She was already calling me First Name -san (I introduced myself by first name), but here she is walking the line of possibly crossing over into being rude and offending me by doing yobisute and dropping the -san. As you can see, it can be complicated.
The last name thing is a general convention, it's not that you absolutely don't call someone using their first name. In Japanese a lot of this is determined by the social distance between the parties, with people you are closer to it's completely normal to use first names. I have no familiar relationship with those two, so in Japanese I would default to Iwahara-san and Watanabe-san in Japanese. To me it feels a little odd if you go from Koki and Shin/Shinichi to Iwahara-san and Watanabe-san. In that case you are moving from more familiar to more formal, like it feels as if the relationship is moving backwards, if that makes sense. I'm going by what I think of as general use cases, but the rules for these aren't set in stone, it's more societal norms that you kind of follow but it also depends on each individual relationship. Again, as a non-Japanese speaker you probably have a lot of leeway afforded to you. If I were in your position I would probably mix English and Japanese conventions and just add -san to their first names, especially since you're already calling them by first name.
There might be practical reasons too, for using First Name -san instead of Last Name -san. Some last names are common, so if you manage to have two people with the same last name in the same place at the same time then you could switch over to First Name -san, even if normally the relationship would call for Last Name -san.
Again, too, with people attaching -san to a first name on the forums, you also have the meeting of the cultures happening. I get the impression that most people on this forum don't speak Japanese, so I think they're probaby not aware of most of this Japanese language/culture stuff, if any. Communication on the forum is almost entirely in English, and so you would expect English language conventions to be followed the most (calling people by first name), and since much of the knife focus is Japan related you get just a hint of Japanese conventions in the mix (affixing -san).
And one last thing just for the sake of clarity. Please don't attach a suffix to your own name. It's only used when referring to other people, not yourself. Like the rest there are actually exceptions to this one too, but really, it's for the best if you just treat that one as an actual rule that is not to be broken.
)- I'm more the ultra western type that will be ashamed of his rank (and consider taking a sword to whoever holds the rank privileged to say what was said 
