I think that's a fairly tricky cut to make, in that you'll need to figure out how to hold your handle upright with the correct alignment, rigidly, and you need a very long, narrow tool. I'm guessing it will have to be a carbide end mill and machine rigidity may be an issue. I know you're cutting wood in that example, so probably fine, but it's a really high-aspect-ratio tool. I'd think about a fixture to hold the handles in an adjustable but secure way. Depends on how often you want to pocket one.Yes, one-piece handle. I think that the picture was meant to show how far the tang would extend into the block of wood. If I was using a wood-working router, I would describe the operation I want to do as a 2 inches deep, 3/4 inch long plunge cut.
Thanks for the info on evaluating a used mill. If checking one out is that straight-forward, I think I might be able to do it.
You also mention removing some of the tang thickness. Do you intend to do so in the pre-hardened state (hopefully)? Even so, surfacing the steel tang is going to be more of a job than the brass guard.
I don't want to give you the wrong idea about used machines. In my experience, it has turned out really well. I'm sure others can tell you stories of buying something that seemed fine but was actually unusable. I'm just of the view that the right approach can manage that risk considerably.