your ideas on a pipe profiling machine

[m_c]

You'd need a y to keep the cut edges parallel for slotting the cross pipe in.
If you rely on spinning the pipe to create the hole, the edges are always going to be half the cutter width of the centre line, creating an unequally chamfered hole. For small holes, or thin pipe, it's not too much of an issue, but if you're needing a tight fit, you really need to use a y-axis to keep all edges parallel.

[D-man]

I see what your saying M_C

the only way time the cut will be verticle is when the router is at the top of the pipe. but when the pipe rotates when the side of the hole is put back into position it will be on an angle.. correct see diagram.

where as if i have an extra axis the router bit will stay vertical all the way around the hole

Does this make sense?