Step 4: Make a cutout at the top of the windows
I used a combination of a router, a jig saw and spindle sander to do this.
I ran the top piece of the window past a straight bit on a router to cut a groove in the piece of wood. I then made increasingly deeper passes on the router until I notched away enough material where I could just go in with the spindle sander and clean things up. A small drum in the spindle sander makes really nice curves at the end of the cutout.
I repeated this process on the other window (creating half of an oval in each) so that when I put them together I would have one complete cutout.
You can use a jig saw to make a cutout in the top piece of the window just like the one I made with a router. Just make sure you clamp the window to a stable surface before you start making your cut. Draw a line with a straight edge so that you have something to guide you.
I found that the jig saw was by far the easiest and the fastest way to make the cutout.