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As far as cutting through the 'hardening' goes, remember that more or less ALL the race bikes have their transmissions back cut. At the top of the 2°-3° cut almost no material is removed. At the bottom of the taper about 1mm is removed. I believe that while some folks 'hardness treat' their transmissions after cutting, the vast majority do not. APE and Cycle-X, for instance, do not even mention re-hardening on their tranny cutting pages: See
HERE and
HERE.
Once again, I need round cuts because my gears have round synchro dogs.
Here are few pics, just for kicks and grins.




In this picture you can see some 'typical wear' on some round transmission dogs -- the one on the left shows what no wear looks like. The slightly rounded one up front shows typical wear on the load-bearing side (also observable on the dog above it...). This tranny is one of my many "junk gear sets," and it came out of a 10,000 mile, un-modified, street-driven CB750. Even under these relatively TAME conditions, you can casually visually observe the wear.

This is an example of the type of solid little Tungsten Carbide 15mm Hole Saw that I will be using to cut the male dogs. I bought several of these from different sources. All of them have carbide cutting teeth, are rated for cutting cast iron, etc, and all of them can be resharpened. They have a 15mm OD, and approximately an 11mm ID. Using a diamond cutting stone, I am going to carefully re-tool the hole saws so that the leading cutting edge is along the ID, instead of the OD. With the Pilot Drill removed, I believe these bits will be able to slip OVER the dog (female fit) while I carefully and accurately remove the small sliver of metal required to back-cut the male transmission dogs.

The cut will look something like this.
The female cuts will be just as simple. I have a handful of tough, flat-tipped 10mm milling bits, and they should easily make the required cuts.
The critical concerns here will be the accuracy of my jigs and the rigidity of my assembly. I have a high degree of confidence that my equipment will exceed the requirements to deliver these cuts. This ain't rocket science.
If I jig it right, keep it cool, and take my time, this is going to be fairly simple.
Peace and grease,
-fang