I've been refining my peg-making process recently. Using the info from Robert Lundberg's lute construction book and observations from a presentation by luthier extrodinaire Grant Tomlinson I've come up with this little setup.
It's a Taig Lathe outfitted with a second tool post mounted directly behind the primary cutter. I disengaged the cross feed screw and played with the jibs until it slides back and forward with very little play. Tomlinson's setup incorporated a neat spring loaded action to push the cutter away from the work when released. I rely on muscle power. The template is a two-piece affair that lets me change head profiles without messing up the carefully calibrated 1:30 shaft taper.
Would I change anything? The tail center on the Taig isn't what it could be. I purchased the "live" center but found it incapable of applying enough pressure on work held with the drive center. So, I'm using the dead center which works fine except for having to give it a tap every few minutes to take up slack.
I've been very satisfied with dogwood as a peg material. It turns well, polishes nicely, and it's very dimensionally stable. I bought a large supply that was cut for use in producing shuttlecocks in the 60's. Nice pinky-tan color that could be mistaken for European pear.
Given the vast quantity of pegs needed to outfit some lutes, I've made room in my building schedule to turn least one every day and stockpiling them for use. I graduate them in three sizes.
I'm anxious that my pegs should retain some "hand-made" character. I touch up the transition points with a small diamond-point tool and add detailing without having a "reference piece" to look at. I'm aiming for a smooth organic shape that's easy on the fingers. Looking at some surviving historical examples and iconography, one wonders if players had any flesh left on their fretting fingers! To that end, I've decided to go with a radiused profile imparted by a small diameter drum sander, followed by a quick buff on a cotton wheel with some wax.