Update: I was able to do it with the lathe and reasonably safely. I had to have a strange combination with the jaws, with some reversed and some not, and I got it to hold real well. I was able to use all 4 jaws to hold the steel. The steel didn't flex much at all except when the bit would break through the hole. However, I was able to get the steel in the 'V' grooves of the jaws so it hold it really well. I ran it between 70 and 200 RPM depending on what I was doing.
The hobbs meter I bought has very tight tolerances. The meter has about 1/16 wide flange all the way around that has to rest on the steel. Too wide and the meter will pull through. Too narrow and it sits on a ridge of plastic.
My concern with hole saws is that the holes end up bigger than you want, or at least it does when I drill them.
I used an 1 3/4 hole saw to drill the rough hole, then my boring bar to get the hole up to size taking small bites @70RPM.
Hole ended up being 2.005 and the meter fits like a dream.
Biggest problem is that I bounced one of the jaws off the edge of the bottom of the carriage. I spun the chuck by hand to check for clearances before I fired it up, but only checked 3/4 of the way around. Of course the one jaw I didn't check was the one that hit
. Scraped some paint off the bottom of the carriage. Learned a valuable lesson there.
Thanks for everyone's suggestions.
---Aaron