router inlay

If you only have one or two stars to inlay, have you thought about doing it by hand?  I am assuming that you don't have a router plane.  I am also assuming that your star is not particularly thick (say 1/4" or so).

Do this on a practice piece of similar scrap wood:
- Lay the star on your piece of wood and outline it with a marking knife or an Xacto knife.
- Open the cut up using the largest chisel you have that fits within a side of the star.  Think removing a sliver of wood from the inside of the cut line to give you a border.
- Clear the field (the space inside the cut lines that are now enlarged) with various width chisels that you have or if you have gouges (I don't), use them.  Don't go very deep for this pass.  I recommend using a mallet or small hammer to tap the chisel rather than pushing with your hand.  I have found that I have more control with light taps rather than hand pressure.
- Set the star in place and see how you did.
- Deepen the outline with your chisel or knife and make another pass at clearing the field.

Note: I am not a person who does inlay.  This is how I have excavated for similar tasks.  You may be pleasantly suprised at how little time this takes and at the satisfaction it can give you.  

Hope this helps.

I have never liked routers for this kind of work.  I find them less precise than hand tools.

What I do is this:
1.  Outline the inlay using an xacto knife.  
2.  Move in from that line a little and make a deeper parallel cut with a very sharp chisel, bevel in, one medium-light tap with a mallet and then move on around the outline.
3.  Mortise into the waste material again using a chisel to loosen the wood.  
4.  Excavate with a router plane set at about 80% thickness of your inlay.  
5.  Come back and finish out to the xacto line with a chisel. 
It can be a little hard to find the xacto line again for step 5, the other work tends to press it closed - that is why you don't work right up to it from the start, doing it that way tends to cause a loose fit.

If you have a sharp enough hand plane, that is an effective way of planing off the part of the inlay left proud of the surface.  It has to be very sharp though, most people recommend a scraper for this instead as they are less aggressive.  When using a plane, I prep the blade with a hollow grind and a buffed edge, it doesn't last long but it cuts without tear out while it does.  Perfect for small jobs like planing down inlay.

Test fitting must be done very carefully as you only get one chance to put it in.  From that point of view a loose fit might not be a bad thing.  The first banding inlay I did was fairly loose like that, subsequent ones were very tight.  I like tight better visually, but it can be risky.  This is also much easier with banding, that would be a good place to start for some practice and then work up to the hard stuff - stars are difficult, all those pointy bits!

In theory you could substitute a power router for the router plane, in which case you would skip the step of loosening the waste by mortising.  I don't know which would work better, I find routers to be one of the fastest ways to screw something up yet devised.  I use them, but only when worth the risk.

These are very helpful responses. I did do one by hand, but I though the power router with inlay kit would be more precise. It's not; a star shape is a bear for a router. I'll start over and do it by hand. I do have a router plane, and I'll use my really very fine Blue Spruce chisels. You would think by now(I'm 86 and have been at it for a while) that I could have done this better; a lame excuse is some eyesight issues. 
Cutting the inside( the first stage of the negative part of the star was ok. I had terrible problems with the next step where you have to keep the bushing hard up against the template to get the slightly larger negative part to fit the (positive) star into.

If I'm cutting a couple of inlays, I use a fixed-base trim router with a 1/8" bit and just tilt the router into the cut.  I use/cut the inlay piece first, then trace it onto the surface with a marking knife.  I use the router to hog out the interior of the inlay and use a chisel to get up to the line.

If I'm cutting many, I use a router template and a guide bushing.   For example, I use Big Island Engraving's dovetail templates for repairing cracks in woodturnings and cutting boards.