anyone heard of this process? or is my machine shop ripping me off.. they say its not shot peening

 

You have rods in your rotary?

 

Knife edging the crank can be done, helps shedding oil bla bla bla.

You can also just get a crank scraper and windage tray

 

Methinks your machine shop is looking to give you a 'wall job'. Ask them to describe exactly what it is they plan to do. It wouldn't hurt to have an exploded parts diagram of the motor with you...that way you can ask them to point out the components that they would 'sharpen'.

-chris