It looks like the cutter needs to be sharpened for one thing.
Running it through a hole in another board will help stabilize it
so you get fewer broken off and undersized plugs.
Cutting plugs with a plunge router works great, maybe even better
than the drill press (more run-out in my drill press).
I've even used 1/4" shank cutters in my OF 1000 and was very happy
with the results. I was actually using them to counter-bore holes
in the middle of a very large bench. Luckily the bits made clean holes
in addition to plugs (which weren't needed).
I just checked Amana and they have a few 1/2" shank carbide plug cutters for the router.Here.
They also have these which are interesting because they have 8 mm shanks.Here.
The plug cutter makes 10 mm plugs and is high speed steel.
Run it on the slowest speed and don't work it too hard and it
will probably work great. It's also possible to re-sharpen.