Removing a star nut in the steerer takes force regardless of your technique.

Some folks would pound it right out the bottom of the steerer, but you would want to remove the fork and brace it against a thick rubber pad to do that.

Your technique of milling away metal until it pops out sounds like a lower-impact solution. I'd undermine a couple nearby points of the star by perforating them in a dotted line. You could then punch through the arms with a hammer and punch (flat blade screwdriver). Remove two or three arms and the star nut should fall out. Careful with that drill, Eugene.

To hold it in place, I would put clamp the bike in a stand using the seatpost, and then tilt the clamp so the front wheel is held securely against the ground. I'd also run a couple straps around the wheel and downtube to hold the front fork in place.