Lets build some parts!!!

[redshift]

Yeah I follow, I actually wasn't thinking much about the small scale, but you can take either a well-used endmill, or even a decent standard drill bit.. so that you're starting with a round profile.

And in this case you're more likely going to use a dremel with a stone wheel to shape your cutter.

The examples I gave above also both show angles, which is wrong.

You'll need either a dead straight (along the long axis of the bit) edge, or an inverted "M" shape to get square inside corners, so that only the actual corners are making the cut.

Not critical for a bearing seat, as bearings have a slight radius on their corners, but more critical for touch-off, and bore depth measurements. I don't recommend grinding your cutting face to the 4mm width, you'll get corner chip-loading, rather you should do more like 1 or 2mm and move the cutter 2 or 3mm to get your cut, working your way in to get your final ID.

In other words, I would't try to take the full bearing width, OR depth in one cut, this is difficult to explain but I hope it makes sense.

You must always allow the chip a place to go, one little chip load will snap your tip off, and you may just have to re-grind your cutter. But worst case is you'll ruin your finish dimensions and have to start over with new material, which sucks.

I haven't looked, but there's sure to be help vids on Youtube for doing small counterbore holes, I would have a look :)