That's probably the safest choice for a lot of reasons. Water hardening steel is fine except it tends to crack more frequently when quenching. Air hardening is fine but if you have to anneal any of it later (forgot to tap a hole or cut a feature?) good luck. 4140 won't last long cutting harder steels but is a fine material for one-off tools to cut aluminum.
The secret to heat treating steel is to be sure it has turned into 100% austenite, that is the stable phase at 1400+F, and using a magnet will guarantee that since austenite is nonmagnetic. You want to end up with tempered martensite, and the proper quench followed by oven tempering will do that IF you start with 100% austenite.
Do you have a regular four jaw chuck? All the cutting tools I have made have been cantilever type, supported only on one end by the spindle or tool holder, i.e. mold cherries, form tools, etc. I have thought that making a D reamer would be sort of like making a crank, with the center of the pilot offset from the center of the reamer form. With a four jaw and dial indicator it is easy to cut the reamer form and then offset the part the desired amount to cut the pilot. When you mill/file/grind away the excess to make the D shape you index the part to be sure you are cutting the material away from the correct side. The offset between the pilot and the reamer form gives the clearance behind the cutting edge. I hope my crude quick drawing gives a little clearer explanation. The final D shape is straight line across the center of the pilot and the curved line toward the bottom, more than half the reamer form is cut away.
If the tool is so long you need to use your tailstock then you may need to drill one center hole, cut the reamer form, and then offset the piece and drill a second center hole to cut the pilot.
A crude drawing but its the best I can do right now.