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Randy, there are plans for building overhead or overarm routers. Some of these are also called pin routers. You will also find plans or at least postings about home built CNC routers. The question is: How much production work are you planning on doing to require a router of this type? If this is just a project to see if you can build it, you can. Professional sign shops use CNC routers. ($$$) The same mechanisims are used for CNC Plasma torch cutting tables. The router or plasma head are attached to an acme screw that is powered up or down by servo motors. Why not leave the X,Y & Z stuff to those who really need it and keep it simple and fun?

PS: If you want to build something really useful for your palm router see Shopnotes Vol. 15, Issue 90 (on sale at news stands now) for the article on the 3-in-1 portable multi-tool. This allows you to use your palm router as a router table, mortiser or edge jointer.
 
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