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Use the scroll-saw blade to measure inward on the 1/4" wood dowel. Place the third tooth of the blade at the end of the dowel, and make a pencil mark where the rivet hole in the blade meets the dowel (Image 1). Make another pencil mark where the top of the blade meets the dowel (Image 2).
Using a 1/8" bit, drill holes into the pencil marks (Image 1). With a band saw, make a small cut on the end of the dowel, perpendicular to the rivet holes (Image 2). The cut should extend as far back as the second hole. Make several passes with the band saw to make sure all of the debris is cleaned out of the slot.
Place the blade in the center of the slot, and hammer the blade into place so the first three teeth of the blade are inside the dowel.