you can buy a honing stone a a tenner, with spring loaded mounts and a flex shaft. just put the shaft in a drill and hone with lots of thin oil.
why wont it machine small enough ?
just stick it in the lathe and make a copy of the original.
threaded bar is no where near strong enough, very low tensile. The cylinder rod will be at least equal to a high tensile bolt, nearer an Allen bolt.
you did the measuring before all this, right? you need that to know where the shoulder goes when you machine the tops.
you should know the fully lifted limit of the suspension [without straining the joints], that = the open length.
and the fully dropped length = the closed length.
if the closed length is wrong you wont get enough drop.
if the fully open length is wrong you will either get no lift or you will rip the suspension joints apart.
if your pics are with the rod fully out I would guess you'll only have abaout 100mm travel once finished and installed.