You can make your own lye by allowing rainwater to seep through charcoal into a bucket or use wood ashes the same way. Once the bone is clean it can be worked with a hacksaw, sand paper and an awl and polished by hand or on a grinder, or use your Dremel. Your lungs will not absorb the fine bone dust and you can become pretty ill. You just leave them in the hot liquid until they are the color you want but do this before you soak them in oil. At this point you need to decide what your final use of the bone will be since some things require the bone to be soaked well in oil before proceeding.
Jawbones make fine war clubs or large carvings such as eagle wings or winter counts.
Shoulder and hip bones are great for hairpieces, bag backings and other curved items. For making hairpipe, beads, pipe stems and other tubular items, deer leg bones or rabbit leg bones work the best and the good old, friendly ants will do most of that work for you by eating out the marrow and leaving a hollow tube. The large deer leg bones are also used to make Cheyenne straight pipes for breastplates. Once the ants are done you will still need to fine-clean and smooth the inside of the bone beads. If you are going to do any scrimshaw, you need to soak it in oil to prevent splintering of the bone.