Custom Crown Molding

1) Choose wood that's no longer wet so that it will remain stable once installed.  If painting the wood, it need not be expensive wood.  The trim-work in the pictures here includes a combination of pine and MDF.  (Although MDF is cheap and paints nicely, it makes a huge mess and is hazardous unless a good ventilation/ vac. system is used.)
2) Rip long sections of wood to desired thickness.  Then route one edge if detail is desired.
3) Mark a line, parallel to the ceiling, then miter and nail the first layer of molding.  Then, mark a parallel line on the already-installed piece and install the second layer of molding.  Installing two or three pieces, in a telescoping fashion, will give a rich look and cheaply dress up a room.  Essentially, you are simply hanging layers of upside-down base molding.
4) Fill any nail holes and imperfections with joint compound then sand and paint.

5) Last pic - alternate way to build the molding - buy pine; rip it down to the desired thickness; then rip another (smaller) piece and glue/nail it to the original piece; route a detailed edge on one or both pieces.  (Here, I've only routered the smaller piece.)  Then use joint compound to fill in any imperfections in the pine.  Finally, sand, paint, cut to length, and install.