You don't have to route it, though with careful depth adjustment and a really sharp bit there shouldn't be a problem going too deep. I just used it as an onlay on my schooner and it turned out fine.

It's just as you say, onlay on the deck and glass on the onlay. The trick is to be sure and feather and fair the edge completely before putting on the glass. It'll take a lot more epoxy than you think it should, but don't skimp. I did and got some small bubbles. No one ever noticed them, so they're no tragedy, but a bit more epoxy and sanding would have prevented them.

Don't be afraid, go for it,

Laszlo

   Loszlo is right, again.

I have several of these onlays on my boats.  Before installing (it is easier then) feather down the edge just a wee bit, being care full not to get into any wood that changes color.  glue down with some good pressure from a jug of water or clamp or whatever works dependent upon the location of the onlay. t

Then just glass over the thing when you class the hull, or mabe just  patch of glass if your hull is already done.  There will need to be a little exta ring of thicker epoxy to fair out the step change of height.  Then do the standard sand/fill weave/extra coat of epoxy routine (probably only one extra coat needed) to get a nice smooth surface, then varnish.  You'll hardly notice that it is an only rather than an inlay, and no one else will notice.

Or, with a very careful router depth setting (adjusted on practice wood) and a steady hand - and maybe using a razor knife to get to the last mm of your outline - I'm sure you could do an inlay.  I just never bothered.

No disagreement with the advice above.  I will add that if applied in a low traffic area, the onlay can be added on top of the glass before varnish.  I hit it with a coat of epoxy then varnish.  I find it to a little less work than under the glass.  I have done this on three boats now and they have held up well.