This is an idea only - not tested and with no guarantees:
Take an M6 bolt, preferably countersunk, and a Nyloc nut and several non-plated washers.* Slip washers onto shaft of bolt, tighten nut down on top to hold them in place. Chuck bolt, thread first, into pillar drill. Spin at slow speed against a medium file, then wet+dry or diamond board held at an angle to the horizontal (i.e. flat but tilted over slightly), to put a cutting edge on the bottommost washer. Move the file and abrasives from side to side, so you minimise clogging and don't wear it in one place (don't attempt this with fingers - stick abrasive to a block of wood!).
Cost: practically nothing.
The only difficulties I can see with this are getting the nut centred and hardening/tempering it.
Centring: Use a slow drill speed. It's only to give a bit more consistency than a manual process. If you have one wider (the 'blade' you're making) and several smaller washers and a countersunk bolt, it should self-centre the bottom washer. The others will be out of balance, but also out of the way.
Hardening: heat with propane/MAPP gas blowlamp. You might use something like an old tin lid (held with Mole grips perhaps) to sit it on whilst you heat it, then drop it into a tin can 1/4 full of engine or sunflower oil. That will probably make it too hard initially, but you can temper it by reheating to straw colour then allowing to cool slowly in air. The oil ought to give it a nice blued colour too, and a bit of rust resistance.
Obviously, when you use it, you'll need a countersunk screw or bolt to set it immovably in the right place, but it ought to work fairly well.
I've taken to carefully glueing Nyloc nuts, nylon-insert-first into holes in jigs, etc., with a hole behind wide enough for the bolt to continue on into the wood some distance. You then have a nice thread for a bolt, that can't shake loose and allows fine adjustment. Handy if you want to be able to change it easily.
All you need is a shallow hole that's slightly smaller than the corner-to-corner distance across the bolt (a bit more than the flats, less than across the corners). Run a _small_ amount of Araldite round the inside with a matchstick before tapping the nut home with the aid of a bolt fitted into it (to thump gently).
Take the bolt out before the Araldite goes off, in case it catches any behind the nut! If the nut's thread does get gummed up with glue it won't be much. Run a tap through gently, or just a bolt with a slot sawn in it across a diameter (improvised thread tap).
Probably won't work though!
E. (coffee hasn't fully kicked-in yet this morning)
PS: If M6 gives a cutter that's too big, do the obvious.
*Plating doesn't affect the performance, but zinc fumes are nasty when you do the hardening/tempering.
