I have the chainsaw grinding attachment to which matt is referring. It will definately hog out the wood but finish work with it is pretty nigh impossible and it can get away from you and make a deep gouge if you aren't real careful and have some experience with it. But what it is designed for it is real handy.
It's called an Excalibur or Squire can't remember what is the name of the tool and what is the company but one or the other I think. If you are interested I'll dig it out of the pile of tools in my trailer and post the info but I think there must be a better way for your application.
Start with a forstner bit, but that will give you flat sides and bottom. Then use a Dremel or other rotary tool with a round rasp bit to remove more material. Then some sand paper on the end of your finger, or a sanding bit in the rotary tool.
All of the suggestion above will work, but it is going to take you a while. Depending on how perfect you want it and now much time you have, you might look for a local turning group and pay on of those guys to do it for you. I know at my local Rockler they are there once a month.
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