Probably the easiest way to do this is with the Dremel drill press and some kind of jig to limit the travel of the burr vertically. The resultant cavity can be packed with my G-M lube. The cavity may tend to hold the lube during the race. I have not tested this on my track with ET, but many of my customers have done it with good results. The theory is sound.
Friction is the enemy of speed.
Burnish the inside of the hub with a pipe cleaner. Getting graphite inside the hub is a problem. This would work the graphite into the surface of the wheel hub. This is simpler but slightly less effective than undercutting the inside of the hub. Chuck an axle in a drill motor and have on hand a small file.