I want to use the deep inlays, not the veneer type. There are other folks using other CNC equipment doing it this way on youtube. Even when SOGC uses the laser cut veneer, it looks like there is a slight line/gap around the finished product.
I’ve tried a few things and this is what I have so far (see pics). I used the same E10 file for pocket and inlay with the following exceptions: the inlay is reversed w.r.t the pocket, the inlay uses a -0.17mm finishing allowance on the outside parts of the letters and a +0.17mm tolerance on the inside of the letters (I mean the holes in the A and D). The negative allowance cuts the piece just a bit smaller. For the holes, I used a positive value because I wanted them just a bit bigger. The depth of cut was 5mm for both pieces.
The experiment used white wood for the inlay and MDF for the pocket. I wouldn’t ordinarily use MDF for this, but it was handy and flat. All four letters were glued in at the same time and clamped overnight. Next I ran a 3/4" flat bit over the letters to cut away the top layer revealing the inlay. There are some gaps.
If I could find a way to make only the top of the inlay (the portion that contacts the bottom of the pocket) smaller, then I might get a tighter fit at the expense of the inlay not reaching all the way to the bottom of the cut.
It would be shaped sort of like this:
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The inlay would be like a wedge shape.
I’ll continue experimenting.