How big of a "knife" can you carry in California(orange county)?

There is no state law regulating knives by length (other than switchblades and in certain locations such as government buildings and schools). As you suspect, a sword would come under the definition of dirk/dagger, meaning you could not carry it concealed on your person (difficult with a sword). You are misreading the sheath provision--what that says is that a knife carried openly in a belt sheath is not concealed, it does not say it has to be in a sheath, it just cannot be concealed on your person.

There may be some local ordinance on the subject, but the enforceability of such local laws is questionable.

California does not have a legal limit on the size of a concealed blades.

http://pweb.netcom.com/~brlevine/ca.txt

Your additional details are reasonable enough to excuse yourself if they ask you why you carry that.