I'm not convinced it was the cut direction because I cut in quadrants as the pic above. Could well be the bits - When I was cutting the rosette I used a couple of very fine, 0.8mm (ish) down cut bits and they cut beautifully but I managed to break them both, so I switched to the larger bit that the dremel circle cutter came with and did the rest of the rosette and the spruce with that.
I may very well have tried to take too much depth in each cut, I ended up cutting 2mm deep because that circle cutter was very awkward to set depth and the set screw seemed to force the dremel off square and kept taking nicks out of the circle. I found that out when I was taking initial cuts in the centre of the cavity so got to full depth and started taking tiny parses at full depth to gradually increase the width of the cavity. The outer cut was absolutely fine, it was just that inner cut that kept tearing out.
This is it after some dust and glue to fill some seams and tearout, a bit of 120 sanding to clean up the filler and wiped with some thinners. i can see a bit of discolouration where the tearout was filled that became visible with the thinners, doesn't look as bad as I thought though.
For the binding channels I was planning to use the trim router and I've got the Radian rebate cutter set which has excellent quality blades, obviously I still have the same risk on the end-grain that I had here. I was planning to use a flush trim bit to route the excess to get the top and the back flush with the sides first and see how it behaves before attempting the binding cut.
In terms of the dremel cutting speed, I'm not sure what speeds it works at - there is no reference to speed, just notches 1 - 5. I'm assuming 17,000rpm is as fast as it goes?