I don't think the KOH will etch the steel (or any metal) but it may clean it. You should try using 30% formic acid, 30% hydrogen peroxide, and 40% DI water at 60 degrees celsius. This is a scaled down etching process from "Handbook of electron tube and vacuum techniques" by Rosebury. The actual procedure from the book is 45% formic acid, 45% hydrogen peroxide and 10% DI water at 80 degrees Celsius. These are percent by volume and the etching time should be around 2 minutes depending on how much you want to etch.
As far as fume hoods go, you probably need some type of ventilation, but it does not need to be a fume hood, a well ventilated room should suffice. One of the grad. students in my lab used the concentrated version recently on MO aperatures and did not use a fume hood and all was well.