I have 2 alternate methods in mind to machine the locating dowels, that's what I am going to call them at least :P Apart from those the rest seems pretty straight forward.
1. If you have an adjustable boring head you can reverse it to machine the outside of the dowels. So basically you are mounting the cutter facing the inside and adjusting inwards with each pass.
2. Depending on how accurate these need to be you might find a Rota broach annular cutter to suit (see attached pic). Obviously you would have to consider how much material it takes from the outside as well. Also when using this type of cutter feed slowly, they do a nice job but if your machine is not solid they can get the wobbles up.
The less you have to move the stock from its original mounting the less room for error