Here's my setup with a (somewhat makeshift) dial indicator clamped to the router arm --
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The inlay is routed with a 1/32" carbide milling cutter. I made the small 1/32" pin for the table insert. It's basically short length of music wire pressed into a brass machine screw --
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I made two plastic templates; one for a diamond shaped inlay and one for square inlay --
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And here's the routed fretboard, ready for Abalone inlay --
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I'm really impressed with the overarm router. I hadn't paid much attention to it until I saw Nick's first mortising demo. I never realized that the quill arm functioned also to lock the quill in position. That is a great design.
Ray