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that is correct you can't inlay something like this in pieces it won't lay right.

I once took a class from Grit Laskin. He did his inlays after the fret slots were cut. His method was very tedious, but worked for him. He routed out the inlay cavities to within about 1/16" of the open slot and left a ledge of wood. The idea was that the frets would still be surround by wood and would be tight. I agree that it was a really great technique, but very hard to pull off. I cut my slots, inlay the pearl, and like John use a fret saw to cut through the pearl. I used to do a lot of inlay that went through fret slots, but not much anymore. When you fret, you can't press down very hard on the pearl or bad things tend to happen. The frets are never as tight against the pearl as they are against bare wood. Minor point, and probably does not matter, Enjoy your inlay!-Bob