Its not terrifically hard if you practice on some scrap hardwood. Also, using a dark headstock veneer makes hiding your mistakes a lot easier. Gaps between the inlay and the veneer can be filled easily and invisibly with some ebony dust and CA glue. The lighter the wood you are inlaying into, the more skilled you need to be to keep the gaps tight. Dremels have plastic holding the bushings in place that keep your bit straight. Don't push hard as you move side to side and you will be OK.
Some tips:
1. Lightly glue the inlay to the headstock and score around it carefully with a sharp pointer or some sort, or an exacto knife. Pop it off by sliding dental floss or some other strong string under it.
2. Rub chalk into the scored line to make it easier to see
3. Some people like to make a series of holes around the perimeter of the inlay rather than try to follow the line all the way around. I have had success with both methods. Try them to see which you prefer.
4. Once the perimeter is established, you can hog out the center section more easily.
5. Sharp corners will need to be refined with a razor blade or exacto knife. You cant cut sharp corners with a round bit!
6. Practice. A lot.
7. If your skills are shakey, consider an easier inlay for your first try. My first inlay was a circle or white mother of pearl, with a deer head inlayed into that in abalone. I purchased it that way. I only needed to use one inch forstner bit to inlay the circle. Here is a picture of another guitar I used the same technique on. the number 15 was inlayed into a one inch ebony circle, and the one inch forstner bit was used to make the inlay pocket. Super simple. Here is the thread with pics:
viewtopic.php?f=24&t=1459
Inlay is not difficult if you practice and take your time. I buy pearl inlays from Andy DePaule at DePaule Supply. Great prices for pearl. A google search with lead you to his site.