Personally, I like a 5 pound sledge and a dull 1.5" chisel, LOL
Ok, in all seriousness, there are a few bits I like to use, the first ones are from Stewart Macdonald and work pretty good, they are a carbide (NOT, they say they are but they're high speed steel) inlay bit, you can get a few different sizes, I like the 1/32" diameter bits, you'll go through about 4 on an ebony board to do one vine, but they are dirt cheap. They kind of suck on maple or rosewood because they leave a fuzzy edge on the top of the route which makes it tougher to see your line.
Next choice is fluted end mills, Stewart Macdonald also sells these, but calls them Carbide downcut inlay bits, (these are just high speed steel too, liars LOL) but they are pricey, you can get better quality and actual Carbide bits from most machine shop suppliers, order with a reverse flute and it pushes the cut rather than raises it, this leaves a cleaner edge which makes it easier to view your line. you can also get double ended ones from machine shop suppliers.
a good supplier of machine tools is Travers tool company out of New Jersey, with 1/32" end mills with 1/8" shanks ranging from about $11 to $25 depending on what coatings you get, Carbides, TICN's etc.