Thanks Keith. The carving bar actually overheated at the tip, I think it concentrates all the pressure on too small a point. The normal bar works but is slow - 15 minutes and a full tank of fuel. I like the idea of making pieces I can break with a bar, this could work.
The Log Wizard from Rod is exactly the type of thing but I think it is too big to get through the 2" X 6" 'door' . Also the chain is still used so I'd have to take all the teeth off the chain to protect the door, but I can do that easily enough.
The 'door' is 2" wide, 6" high.

Yea Mark, I know the carving bars get pretty hot, and certainly would if you were just using it to hog all of that wood out, but probably not if you try my suggestion.

Plus, I think I recall that these bars are titanium, which will hold up under much higher temperature than the standard bars.

By using the approach I suggested, I think you could go at it incrementally, which would allow some cooling time between cutting a vertical column of blocks, then snapping them off, before aiming off to one side and making a few more cuts that you snap off before sawing more.

I'm guessing your study is for RCW. There is a fairly new WMA near my cabin, which is being managed to improve their habitat. I am loving how the burning ever two years is changing the nature of this habitat to a more open savanna. I think the deer population may be improving as well.

I'll try the plunge and snap idea in the next few days. The carving bar cooked within minutes so I'll stick with the larger tip which works fine.
I'm in Australia, target for this first project is a critically endangered arboreal marsupial.

Any other tools or drill bits or high speed cordless implements you can think of?

This is used for carving out bowls:
http://www.arbortechusa.com/view/woodworking/mini-turbo/
You might contact them and see it you could get a longer extension to reach into your hole the required depth, Those carbide insert teeth do a job on wood

could you do the carving, on the ground , in a large block ,possibly cedar .Rip it in half with a chain saw. Carve out the required cavity . Then screw the block back togather. It could then be hoisted to where you want it, and bound in place with ratchet straps . Something like building a birdhouse, except larger.

Thanks but that's a nest box. The purpose of this project is look at the feasibility of introducing cavities into trees: Will the cavity be used by the target species, will the tree fail.
Do you know of any really serious cordless options? Something like the mini-grinder from arbortech but with a longer bar?