I have done it with a Dremel as well. A few quick points to mention...
With your grip on the gun, clearly mark the area that will be where the tab moves under the grip. Next, transfer the markings to the bottom side. I primarily used the barrel shaped grinding wheel and the little pointy grinding rock. I would dremel for a bit, stop, put the grip on the gun to see how much progress I had made, and then continue. I repeated this until I could put the grip on the gun and the safety move freely. You don't want the grip touching the safety's tab and when you tighten down the grip, you will end up tightening the safety, preventing it from moving.
I would also suggest using something like masking tape on the outside of the grip. If during wood removal, the grinding wheel bites into the wood, it will have a tendency to circumscribe around the grip (yes, it happened to me). The tape will simply prevent serious damage from being done to the pretty side should that happen.
I've done a half-dozen, and did the last one with a short, sharp pocket knife. Don't make the "window" any larger than necessary. You want the wood to support the extension, so that the torque of your grip isn't applied to the pin joint. Some people like to grind the top of the grip panel down for clearance, but I like to leave the lever supported by the grip panel, too.
I had to modify some handmade staghorn grips for Gov't to fit left side thumb safety. To make sure I didn't damage the surface, I used a file and rounded it down until just enough cleared for the safety. I did have surprisingly good patience, though. Guess it was the $100 dropped on the grips that did it...
"Double-action in an auto pistol seems to me an ingenious solution to a non-existent problem." -Jeff Cooper G&A mag Oct. 1973