The best bit is a very sharp one. I've also used a Forstner bit to enlarge the holes for the pillars.
Earlier you said this: "Do you remove material all the way to the tap at the end of the barrel?"
I don't understand what you're asking.
And you also said this: "Do the pillars cone contoured to the action? " I think you made a typo, so this one I can guess at.
You are asking if the pillars COME contoured to the action, right? The answer is: Of course not. You make them yourself out of a pipe nipple.