I would never use a knife like this to remove the screen. It’s way to wide to get in between the glass and body, without potentially breaking the glass. I use the Ultra Thin iFlex Opening Tool, sold by IFIXIT. Seriously. You won’t wanna use a fat blade like that after you take the iFlex for a test drive.
It sounds like a Force Touch Gasket issue to me. You’ll need to replace the FTG and be careful to avoid stretching the cables attached to the screen. F the display works ok it should be fine.