How about some diamond coated (or similar) sand paper mounted to the
back of one of my turning tools. The magnet is only 2mm thick.

Not sure what grit would be best though. Maybe a 220 or 400? Then I
could flood that with water, and change it frequently. Just a thought.

Ed: What radius insert would you recommend for turning a ceramic
magnet that is 2mm thick. I am going from 12.5mm dia. down to 10mm
dia.

Thanks