I just made a router table top using the Kreg insert. In my case, I used the Kreg levellers, but if I recall from the instructions, the table top needs to be a minimum of 1". Here's a link to a post I put up a few days ago: http://www.routerforums.com/table-mo...ml#post1713906
Anyway, you've got a couple of choices, depending on whether you are going to cut out the entire insert or leave a lip around the edge for the plate to sit on.
That Kreg insert has a 3/4" radius, so here's how I did mine:
After setting the templates in place, I used a 1 1/2" forstner bit to drill out the corners - the 1 1/2" bit gives you a 3/4" radius. After drilling out the corners, I used a jig saw to cut between the holes, staying shy of the template, which removed the bulk of the material. I then used a pattern bit, following along the template, to flush trim the remainder of the hole. A pattern bit has the bearing at the shank end of the bit, and the bearing rides along the template. The Kreg levellers are screwed into the table top, from the bottom of course and have screws that screw in and out, which the insert sits on, allowing you to level the insert. KregŪ Precision Insert Plate - Lee Valley Tools
Option #2 is to leave a lip around the edge so that the insert sits on the lip:
In that case, you would jig saw out the bulk of the material, leaving about 1/2" shy of the template, then use a mortising bit (also called a mortising dado bit. You would still ride the bearing along the template, but the mortising bit would be set to the depth you want, leaving a lip around the edge.
I just noticed Bob's post and I agree with him regarding the table top. I used two 3/4" tops, screwed together for a 1 1/2" thick top.