Yea, I thought of milling them down. That's just hard for me to do after spending a good bit of money on quality tooling. It just seems wrong.
I'm not sure on the inserts. I'm not an insert authority by any means. I was thinking diamond or triangle just because it seems the most versatile and you get more cutting edges so it's a bit economical also.
I hear ya, although many people do it, I'm not a fan of milling down tool shanks. But I have on some cheaper ones & used ones. The ones I bought new were purchased in the size I needed.
Diamond & triangle are most common & they perform well.
For diamond there is 85°(C), 55°(D), & 35°(V). I personally like 85° & 55°. I don't have a need for 35°, not yet anyway.
For C diamond CCMT/CCGT inserts are very common. The holders are SCLCR for RH & SCLCL for LH. You can easily find these in 1/2" shanks as well as boring bars.
For D diamond DCMT/DCGT the holders are SDUCR/L, also available in 1/2" shanks & boring bars.
For triangle inserts there are many more holders than the ones above for these holders that orient the position of the insert for different operations. Search TCMT holder to see all the different ones.
Also pay attention to the insert size for 1/2" shanks. They come in 21.5_ (1/4" IC) & 32.5_ (3/8" IC) sizes. I prefer the 3/8" inscribed circle size but one reason to go with the smaller 1/4" IC insert is if you use boring bars that take the same size, you can use the same inserts for your turning tools & boring bars.
BTW the inserts I mentioned above are all positive inserts. Not sure what size lathe you have but with 1/2" shanks you get much better reults using positives than negatives.
Also check out latheinserts.com. Curtis is very knowledgeable & used to work for Kennametal. He doesn't list the higher end brands on his site but his stuff is usually always of good quality. Last I remember most of the tool holders he was supplying are Toolmex (TMX).