I agree with RedRends that a new blade is in order, however, You are most certainly not beyond getting those edges smoother, that is, if you have a rotary tool. I have made many a cut with a duller knife, but with careful sanding with a rotary tool, most any rough cut can be made smooth.
Some people prefer to use super glue, some prefer hot glue. I would not necessarily say one is right and one is wrong. After all, we have lots of members who love their hot glue! Schankerz and New_Brody exclusively use hot glue for their foam work! With any glue, it all comes down to how carefully you apply it. I find the trick with hot glue is to only use a thin layer, to avoid it squeezing out. That being said, I would certainly recommend trying a few different types of glue. Here are Schankerz's and New_Brody's suits:
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While the use of high density foam is not a bad thing, stellar suits can be made from foam mats! Those two Spartans above are made from foam mats, and so are Bunty Scrungus, PaiganBoi and yours truly! (Shown in that order)
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I have not used clay, but I can tell you that Quikseal is my best friend! Spending time making sure there are no gaps in the armour adds a really nice layer of polish!
Sorry RedRends, I didn't mean to tear your reply apart, but I did want to share my experience knowing folks who use hot glue and foam. All the guys I mentioned above are in the canadian regiment, which may explain why we like to use easier-to-get materials. High density foam and Barge contact cement can be pretty tricky to get our hands on, so we make due with what we have lol! Whichever method you choose, if you build slowly and thoughtfully, you can make a phenomenal suit out of pretty much any material and glue!