I'm using <abbr title="Colonial Charter">CC</abbr> 1.7.1 with Banished 1.0.6 playing on Adam and Eve. I made rough tools but when the villagers pick them up to use them, they display as steel tools. Are they really steel tools or just displaying improperly?
The current version of Journey is 1.75 which should be played using Banished Beta 1.0.7. Each time a new version was created, it was to fix bugs like this. Honestly, I don't remember if they were real steel tools or not. Perhaps you should try 1.75?
I think that it's displaying wrong. I remember this coming up in the past and I couldn't figure out how to make it display non-vanilla tools.