Won’t the SCS oxide surface layer flake off around the punched hole?
Isn’t the wustite scale hard and likely to shorten tool life?

The answer to both is No !

As the detail of the small holes at right shows, this punched SCS plate features clean, sharp edges with no flaking.

Identical punches made 10,000 holes in 0.083” sheets of SCS and P&O hot rolled steel. The punch tips showed very little difference in wear, with the OEM tool engineer feeling the SCS punch actually showed slightly less wear.