Hi Taper
That's what I did I used two 1/2" X 1" X 8" hardened parallels on there edge and spaced them up on parallels from the bottom of the mill vise, and spaced up the swing arm as well, this way equal pressure was applied throughout the swing arm for milling the slot, worked great.

O-1 tool steel is not difficult to heat treat at all, beings you have a furnace just heat it up to around 1500 deg, and quench her in oil then clean it up nice and shinny and reheat it until it turns to a straw color and quench it once more, it's now tempered, here's a link to all the specs, http://buffaloprecision.com/data_sheets/DSO1TSbpp.pdf