Or a pillar drill & fabricated piston holder that fits in the chuck with little or no play and a home made clamped down tool tip holder that you can slowly introduce a cutter through . (What are the possiblities of increasing the width of the groove in the piston? That 'only' needs a lathe.
You could face 1mm off the ring on the lathe. Superglue to a flat plate (maybe inside a sacrificial 'washer' whose ID is that of the bore, to keep the ends closed and restrain the ring a little).
Edit: nothing needs to be concentric in this setup.
A vertical lathe ? )