Myron, let me take a stab at this. You have a piece you want to duplicate, lets call it an oval. You want to create a jig because you just know you will sell 97 of these things as fast as you can make them. You start out by making a pattern the exact size you want the finish piece. Since your jig must allow for a guide bushing it has to be bigger than the pattern. We will use a 1/4" bit for making the cut because the less wood you are trying to remove the easier the cut. For the sake of explanation we will use a 1" guide bushing. This will give us an oval cut out which is 1/2 the diameter of the guide minus 1/2 the diameter of the bit larger than our pattern. In this case it would be (1/2" - 1/8" = 3/8" larger than the pattern on both sides) Now we have a template which is actually 3/4" longer than our finish piece should be.(3/8", both sides)
To make our piece come out the proper size we will use the same bit but change the guide bushing size. We reverse the process, 1/2 the diameter of the guide plus 1/2 the diameter of the bit will equal our finished size.(In this case 1/4" + 1/8" = 3/8" on both sides. Since 1/4" is half the diameter of the guide we would use a 1/2" guide bushing with our 1/4" bit) I went through this explanation because a jig is usually easier to work with for a lot of repetition. If you know you are only going to make a couple of these ovals you can get by making just the pattern and using a flush cutting pattern bit. These bits come in many sizes, and the only important factor in choosing which one to use is that it is not larger than any of the area's you need to trim. 1/2" is a popular size for this type of bit, and it will cut most anything you throw at it. You will get more wear out of a larger bit, and it will be stronger than say a 1/4" bit. Remember you are not cutting the full width of the bit so a smaller bit is not the big advantage it is in making a through cut. One last thing, if you are making a pattern out of 1/4" thick material try using Masonite.(hardboard) It is usually cheaper than plywood and easy to work with. There are no voids which could create snags on your edges.