As far as I can tell, butterfly cuts their blades oversized with some type of router, and then they use these monster sanders to finish stacks of blades all at once. Check out this video (starting at :20):
https://www.youtube.com/watch?v=0YiNEfBakqs
If you don't mind me asking, how do you cut your blades out? My flush-trim router bit tends result in some tear-out on one side (when going against the grain right) near where the blade-face rounds into the handle. To eradicate this issue, I recently built myself a tool (involving a bearing just larger than my sanding drum) so that I could use an oscillating spindle sander to cut blades flush with my template (and I recently used it on some ZLC with tremendous success).