Need expert guidance on rookie DIY build.

[JAZZCNC]

Plasma is what you need. The forces to cut steel, even with Slot drill are much more than you probably realise if your suggesting to use Dremel type spindle.
The spindle will need to be slow spinning with plenty of torque. The Milling head will need to be very strong and clamp the pipe tight to handle the forces involved.

While Plasma cutter will cost more than spindle the cycle times for jobs will be much faster if you used plasma and the overall machine strength can be lot less as there are no cutting forces involved saving money on the build. These two things alone will outway the expense and pay back down the line.

No brainer to me Plasma is the way to do this.! . . . . . Just look around every machine doing this job uses Plasma or Laser.!!!