Take shimano's indexed bar ends and create a different shift lever. I understand the shifting mechanism is housed in the lever itself so it would probably require some machining. Is this even remotely possible?

You bet it is. A good trades person, in the required discipline, can make anything makeable (if that is even a word). The question is, can you do it?

While possible, those bar cons will have more valuable than the equivalent DT shifters. So if you want to make a switch, sell them and pick up a set of DT shifters.

My dad has been a machinist for 30 years. I'm hoping he will be able to do it

I'm also kinda curious, why you would want to do this. Not that I scoff, you understand! I made a new lever for a bokenSuntour barcon, and totally re-shaped the body in an effort to make it look less Japanese. I ended up with a shifter that works well enough (though not nearly as well as the original Suntour one) and (in my humble opinion) looks better. At least it suits the bike stylistically, which the original Suntour didn't.

I want an 8 speed bar end capable of switching between indexed and friction with a longer classic looking lever. I hate the shimano stubs and am buying some Riv Silvers.