Yes ZooT is absolutely right, machining any form of laminated material is a pain.
There is even more to it than this. You must not put your magnets in drilled holes, the leakage flux will be dreadful and you will waste much of the magnets potential. Those cages that people hold the magnets in are fibreglass or aluminium or some non magnetic material.
You can machine the rotor down to stick the magnets on the top, but you will find that it is not a solid steel core, it has slots with aluminium bars cast in it( connected to those end rings with fans). If you machine to a diameter where it is part steel and part aluminium you will only have a small steel area and you may saturate what is left.
If you choose a diameter that brings you below the cage bars then the end rings will fall off and most likely the whole core will collapse into a series of individual rings.
Some do it, much more trouble than making a new rotor in the end.
Flux