I have no problem with wootz cutting iron, nor with "simple" steel cutting iron - remember eisenhower, gurda marks, which to some extent precisely mean - cuts through iron. Now here comes my difference from Jim - he would cite you all the literature, but I am lazy, so I want
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These marks probably appear around XVIIth century, and probably "cut an iron nail" test becomes a standard perfomance test sometime around this date.
Now, after reading about 15 different middle eastern authors and western travelers on middle eastern warfare, I find interesting pattern: western swords, specifically those sold by supposedly vikings to the middle east are highly praised for their quality, something until XIIIth century. Then you start seeing things that suggest that they are of not highest quality (like an edict requiring prosecution of masters who make "frankish"-like swords, but selling them as "damascus", extensive praise for hindu swords, with also extensive reference to their beauty, and, sometimes - directly to their fighting qualities (even though it is often said that such swords are "hard" and good to cut this, and such swords are soft and they are better in cutting that) starts to be applied consistently.
Now, we know quite a few western swords from before XIVth century used in the Middle East (Alexandria arsenal may be not the best example). But I checked numerous accounts of traders to Safavid Persia - not a single one was importing swords.
But then in early XVIIIth century we see that western swords reappear again.
However it can all be explained not only by variations in western vs. eastern swords qualities but also by the dynamics of trade routs and differences between western and eastern use of swords (popularity of slashing etc.).