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A rabetting bit with a ball-bearing pilot (which rides on the finished smooth edge) may provide the lip "overhang" you are looking for to keep the lid from sliding off if you want a sharp inside corner. The suggested cove bit, however, will conform the basket's top edge to the lid (if that is the look that you are looking for).
By the way, will you be moving the router around the lid or the lid rotated against the bit mounted in a router table?
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