Yes ,a small cutting wheel for the dremel is a better way to go than a bit for cutting a groove. Almost all the baits I build for Musky are thru-wire, I just prefer it. Here are two different methods that have worked well for me. Drill through. I use my lathe, but a larger drill press would work. I have a drill chuck for my lathe, so I'll use an 1/8" bit in the chuck. Calculate and mark the angle of the line. Position one end at the tailstock and start drilling at the other end line mark. SLOWLY, move the tailstock toward the bit while holding the lure . I start with a regular 2 1/2" long bit, then chuck up a 5" long bit. If you are doing a "Grandma" style crank you can then drill a short under the nose angle up toward the main line through. Also, drill short drops for hook hangers up from the belly with a larger bit to fit paper clip style wires.
Another method that has worked well for many style baits is by starting off with 2 pieces for a sandwich. Use two pieces slightly thicker than your desired finished thickness and larger than the finished profile. Use short dowels and pin the two together in places that won't interfere with the thru-wire, hook hangers, ballast or lip locations. Now you can cut the side profile and start shaping, carving, drill through with a small bit for exact eye placement if desired, whatever. When you are done you can split that baby open and work on the inside. Wire thru, hook hangers, ballast, rattles or sound chambers, maybe even a moving ballast system for improved casting, whatever you would like. Then, glue that thing back together, fill any imperfections, seal, prime,paint and topcoat. If you are wondering what that might look like check out the Yellow Perch in my Gallery. Good Luck, and Happy Fishing,
Douglas