Need expert guidance on rookie DIY build.

[EddyCurrent]

Could I use the likes of a handheld mini drill as my cutting tool?

I wouldn't think so, also this needs thinking about more because it now seems overkill to build a 3 axis machine for such a simple operation.
It's made more difficult due to the pipe being steel, if it was wood for example I would make a larger tube to go over it, this larger tube would have the required slots already cut in it then I would use a router with a guide bush to follow the slots while cutting the workpiece tube inside, if you follow my drift.