Best way is to chuck up the part and simply go at it
with a boring tool.

Thanks, but let me make sure we're on "similar pages"...If there was no
slot, I would have used a #3 center drill followed by a letter size "C"
drill then finally a .2495 chucking reamer. With the slot, I'm thinking
of starting with a "D" drill (just slightly larger than the shaft of
the center drill) to a depth just short of the flat then continuing
with center drill on the flat, then "C" drill then chucking reamer. Is
this similar to what you had in mind? Already have the parts mentioned
(I do a lot of 1/4" boring) and yes, I'm using a lathe.