Do you mean something like this, but in a different size?
http://cgi.ebay.co.uk/5x-0-5mm-Carbide-Mil...1|293:1|294:200
I'm a little confused now... I thought a down-cut bit would be preferable for inlay because you're seeking to create perfect crisp lines to fit the inlay piece. An up-cut bit would leave slightly less crisp lines due to the cutting action, no? Also, couldn't you just use a vacuum system attached to the dremel router base to get the chips/dust out of the way while using a down-cut bit?
Correct on the bits. You can use any bit down or up doesn't matter. I have not found much of a difference if the bit is sharp. Buy what's cheapest.