Does this machine have to be able to cut steel? It's easy enough to make a machine to cut wood and soft materials like that. Aluminum is possible if you do a really good job at maximizing rigidity. But steel requires a different sort of frame and an entirely different sort of spindle. The one you've picked out is fine for wood and aluminum, but no - it won't have nearly enough torque when slowed down to 1000 rpm. I suppose you could design an elaborate pulley train to slow it down and multiply torque, but it would probably be a lot easier to start with a different sort of motor that isn't going so fast in the first place.
Look at examples of milling machines designed to cut steel. They tend to be quite massive, with a spindle that runs in a much lower speed range.