OK, so we all know that steel doesn't make an efficient heat sink, lets not talk about what would be better. Since this is the automobile forum, lets talk about automobiles and the fact that the majority of them (mine at least) are steel.
Has anyone run across, or preformed and documented an experiment with a steel heat sink? Steel would be better than nothing, and some LEDs can be run with no heat sink, and some larger LEDS can be run at low amps with no sink, so how many watts can you push into steel?
I have several dedicated steel tools, and I am worried about galvanic corrosion on moving parts between the copper/aluminum sink and the steel body part it is attached to. Also, I am very interested in integrating the lights into body work.
Steel makes a poor heatsink. Ideally you would try to find a way to use a more suitable material.
Having said that, a poor heatsink is better than no heatsink. But not by much.
Your worries about galvanic corrosion can be solved by using brass between your warm body and the steel part.
You can also consider using the brass as a heat sink instead of the steel.
Copper is excellent but generally cost prohibitive.
Aluminum is very good, and is affordable.
Brass is decent, handles one of your issues, and is reasonably affordable.
You should keep in mind that heat sinks are not effective in a linear fashion. In other words, as they heat up, they are less and less able to dissipate heat. That is why you want an efficient one; for example steel that works initially, even poorly, may have no effect whatsoever after some period of time accepting continuous heat.
If you have good data from the manufacturer of the product you're considering, you can calculate the appropriate heat sink area required; this is routinely done by electronics designers. There are calculators out there for DIY'ers. Heat sink resellers may also be of help there.
Efficiency of a given mass of heat sink is improved by any method that maximizes surface area. The key here is to remember that it's the surrounding air that ultimately dissipates heat; the heat sink material is only the means by which we expose heat to air for dissipation. The problem with poor materials is that the material itself may concentrate the heat near the source, so the added surface area has limited value. However it underlines the value of air circulation. In many circumstances that alone may be enough; in fact you should strive to always maximize air exposure and circulation first, heat sinking is what you do when that is inadequate to dissipate the heat you need to remove.
You can almost never have a heat-generating electrical part that runs "too cool". If you can reduce operating temperatures by almost any amount, you extend the life, generally, of your heat-generating electrical part. Therefore heatsinking beyond the recommended, calculated, or measured amount is almost always beneficial.
In electronics, a "seat-of-the-pants" test is to place your hand on the heat sink. [Naturally this is done after safety issues with electricity have been assessed and resolved]. If you can hold your hand there for 10 seconds, it's adequate for most purposes. This is of course no substitute for actual calculations from good data, but it's useful information none the less. A caution in your case: this is really only effective when a suitable heatsink material is employed.