I built a CNC machine that used a small inexpensive rotary tool that rode on one drawerslide. It was fun to see it actually work (this was the first CNC machine that I have ever built) but it was limited in its ability to cut larger pieces of wood. The small rotary tool also lacked torque and had a tendency to wobble due to no bearing at the collet.
So I redesigned the gantry to hold a router that could use standard sized 1/4" bits.
Here's a quick little video using Mach3, LazyCam, and some cheap stained pine.