I have finally had time to have a good look at my router lathe.
Positive aspects:- Yes it is possible to machine very small diameters and cut spirals and grooves into the bodies. It is also possible to make a template to repeat a specific profile if you want to make a series of similar items.
Negative aspects:- The unit was designed to machine furniture size components and producing small items means there is very limited visibility. The wood has to be mounted between centres and the recommendation is the wood should be at least one inch square. The centres provided with the machine are specific to the machine so it is not possible to mount centres using a morse taper.
So, you can produce pen sized components but you would need to cut them out of a thick piece of wood and then drill a hole through and finish off on a conventional lathe.
The approach suggested by Jimjam66 looks better and you could use a Dremel type of tool instead of a full size router