Without knowing the specific end use and history of the wood or the scale of the project I can only give you three general techniques and you can choose which one suits your needs best.
- Paste Filler.
This comes in a variety of forms but essentially its exactly what it sounds like. It hardens to a sand-able surface, takes stain and finish more like wood than other fillers and some varieties can be applied in large quantities (hardwood floors filler). Some are water based, and some use solvents (acetone and MEK). In this case (and this case only) the water based is just as good as solvent but not if it's for exterior use.
- Oil Putty.
This is the finish carpenter's choice for puttying nail holes in finish grade trim and other small repairs and fills. It comes in a variety of colors that can be mixed to achieve any shade. The putty is applied after finish so it goes on soft and stays flexible. Its great for small fixes but would be impractical to patch large voids or large areas.
- Epoxy
This is just a clear, two-part adhesive tinted with pigment to create a hard, durable, stable patch, here's a helpful link: West System. This method is great for filling things like knots and surface checking. We primarily use it on reclaimed lumber to fill the defects prior to finishing. Epoxy can be used inside and out, on small or large areas but it is the most expensive of the three options.
Whatever your situation, one of these three should work. The only general advice I can give you is, whatever method you use, make sure your fill is at least as dark or darker than the wood. Light filler really stands out. The catch is that many woods (cherry, fir, mahogany) darken significantly over time so you have to adjust by eye and your gut. Cheers!
I would use a wood patch called a dutchman.
If your router has a plunge feature, make a small template to aid in cutting in a dutchman. The article the link refers to does it differently than I do, since it cuts out the damage and the repair piece with the router using one template and two different guides. Where I use one guide only to cut the bad spot out, and a table saw or miter box, or sometimes both to cut the repair piece itself, depending on how big the repair is.
You would be able to get a dutchman in plane pretty easy with the surrounding material, but as with any repair of this nature, I would do it before the last pass of the router over the whole surface, then sand everything uniformly afterwards for the fine finish. This will clean up any glue mess from the install of the dutchman.
The router speed to use on that is not critical, but for the larger bits, you can go too fast. Sanding will take out anything the router leaves behind. I would keep it a the lower half of your routers speed range 10,000 RPM max. The rule of thumb is, the larger the diameter of bit, the slower the speed. Some router bit manufacturers list the maximum speed a bit should turn. Other than that, listen to your router while it is cutting, its distinctive whine will change as it is pushed into the wood. Do not let it change in pitch too much. The amount you are cutting in one pass is a good amount, take no more on a full cut pass. As in each pass of the router cuts the full 1" width.
Learning to make templates and using bushing guides are one of the more handy things you would do well by.
Best Answer
Use a high-performance 2-part wood filler. It's like automotive body filler but sets a little slower and is easy to plane/form/sand smooth after it sets. This is one brand that I like but there are many brands out there:
I use a "cheese grater" style plane (Surform) to get it flat, then sand smooth. Works great for repair work when replacement of damaged wood is impracticable.