I used an angle grinder (using the thin cutting disks), just freehand and it came out pretty good. I marked a circle with the bottom of an Ale Pale, which happened to be the perfect size. Take a couple of passes, take your time, you don't want to cut all the way through on the first pass. Once you get all the way around once, the wheel will pretty much stay in place in the groove.
EYE AND HEARING PROTECTION IS A MUST!
Clean up the burrs with a file and some sandpaper.
Bobby's method is way-cool (Yuri's is even cooler).
MOST IMPORANT: Ignore any and all advice offered by BierMuncher!