Why a seperate spindle for the slotting saw? You could use an arbor that fits an ER16 collet or A2ZCNC builds a slotting saw arbor that screws on the ER16 spindle nose. It sounds like you are considering bushings instead of bearings. What kind of rpms are you expecting and how long will you run it at these rpms? I would think you would use some angular contact bearings that you could adjust preload and eliminate run out or play.