I had the same problem on some of my projects. Last week I finally
got a plug cutter from Rockler and just finished giving it a try. I
was able to sink the screw head 1/4 inch below the surface, then
jammed a plug in, matching the grain, and after it dried, used a
chisel to pare it off smooth. Actually 2 chisels, the first to get it
close, a very sharp one to do the last cut or two. Sandpaper to
finish, and it looks great. Since this was my first try, it went a
little slow, but after 40 or so holes, I'm getting the hang of it.
What I liked was the ability to use the same wood (scraps) rather than
a hardwood dowell which I think would be hard to smooth off (end
grain).

Anyway, I wish I'd gotten one of these years ago! Hope this
helps.....