Very nice thread erniebro!!!!
I have had a similar idea for a while. I'd like to have a cylinder either mounted permanatly to my table or eaisly relocated to exact same position (dowel pins) for tool diam. and length setting. It would be very much the same as yours. It would add the functions of doing the math to find tool diam. and length and set those in your tool library for current tool number. I think it would need an airblast to clean all chips off just before probeing as well.
You may be able to get around this by running your spindle in reverse direction of tool at a very low speed.You may also need to chuck up a round rod instead of using your bit to get good accuracy. Depending on the design of the flutes on your bit, you may not get an accurate center because of how they touch the inside of the pipe.
eibbor