I agree that you should mark and drill the hole first then insert the pin and draw the outline.
The way that I do this type of inlay is to take a high speed dremel cutter with straight edges and flat bottom. I mount that in my drill press and then use it like a horizontal milling machine to remove the inside of the outline. You can actually be pretty precise if you take your time when you get to the edges. For the pin you show above, you might want to get a small diameter cutter. I've seen them as small as around 1/8".
That's the way I inlayed the wood on this walking cane handle but it wasn't quite as detailed as the pin you want to work with.
Good luck with it.
The way that I do this type of inlay is to take a high speed dremel cutter with straight edges and flat bottom. I mount that in my drill press and then use it like a horizontal milling machine to remove the inside of the outline. You can actually be pretty precise if you take your time when you get to the edges. For the pin you show above, you might want to get a small diameter cutter. I've seen them as small as around 1/8".
That's the way I inlayed the wood on this walking cane handle but it wasn't quite as detailed as the pin you want to work with.
Good luck with it.