Well, as we can all see, there are many solutions to the question.
I'm not trying to dissuade against using a projector but I think Corey has come up with the best solution. But, you CAN do the same thing with a projector.
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I wonder if he isn't simply printing off the font and words etc. and then gluing it to the board and routing it out over it. Turnlock Signcrafter will work but it's basically one style of letter.
Corey
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Moe, I've seen guys & gals make signs right in front of you, doing them "free-style". They only do a "rough-in" hand lettering, (drawing), to give them the idea of what letters and what shape they want them to be. This is easy for them to do because, they've done it enough it's second nature (sorta say). Perhaps this isn't the best answer you wanted but, it's the best I give at the moment.