I have never done this, but I have done the stacking 2 boards of different colors and cutting them out then swapping parts. There is a lot of sanding to get them to fit exactly perfect. Remember on the letter "S" the outside cut out on the curve will get bigger and the letter itself will get smaller on the outer edge, as you sand, thus you may have to fill in the difference by banding the outer letter with a thin strip.
Myself I think I would make 2 boards and cut the "S" out first and sand the edges smooth, then lay it on the second board and mark around it. Then cut the second board a tad smaller, to give you some material to take off to fit the letter into.
Good luck, be sure to take some pictures of how you decide to do it. A real challenge, maybe mock up a couple before you do the final project.