Talk to a guy by the name of Stan at his gunsmith shop in westbrook minnesota. His tel# is 507-274-5649.  He is a custom rifle maker and is very sharp on the little details of accuracy.  I don't know as though he will tell you or not, but you will have a very interesting and worthwhile conversation.

From the point of view of appearance, the only way that this can be done and look good is to use a horizontal machine with a circular cutter (with a radius on the teeth).  I mention this first because appearance is usually important to anyone willing to pay for a fluted barrel.
To me the other big question is accuracy.  You need a good, rigid set-up to assure that the flutes are all the same depth and evenly spaced around the barrel.  Small differences in flute depth can make a big difference in accuracy when the barrel gets hot.  On rifle barrels, the use of a rest of some kind is necessary to prevent deflection during the cut. Excellent concentricity between the index mechanism and the supporting center is also necessary.
As long as the cutter is sharp and does not try to cold-work the metal (don't use a negative rake cutter) I have never seen any problems with fluting.

A small helical broaching tool does it without any problem.  There is no need for indexing, positioning, etc. although you have to have a small broaching machine.  The tool might look a bit expensive, but if you divide its cost on the number of parts produced and time you saved, it looks very good.

Viktor
http://viktorastakhov.tripod.com

BertusP:
Danjon Mfg. Corp. in Cheshire, CT not only makes the tooling, but can provide detailed instructions/suggestions
[to their customers, I presume] for this sometimes tricky operation. I don't know if they have an email address, but
you can ask for Mr. Metz at (203)272-7258.

Since my post back in september, I've talked to a few people and have done some testing myself.  I shoot 50 caliber single shot rifles (yes, the bmg cartridge) and if weight is not a concern, you are actually better off using a bull barrel (heavy diameter, at least 4 times the bore size) Residual stresses from machining the flutes can actually make your POI (point of impact) walk around as the barrel warms up.  This is not a big deal at 100 yards, but when you're out in the 1000 to 1500 yard range, it makes a big difference.  Now I do emphasize weight, because my prize 50 rifle tips the scale at just over 32 pounds without the scope, cheekrest, and an empty chamber; not to mention the 100 lbs or so of poly-pellet filled sandbag rests that are used with it.  But that weight is one of the costs of accuracy, a well set-up 50 rifle will punch the same hole all day long at 200 yds, for those who care to shoot at that short distance.  30 calibers are a little more demanding for those kind of ranges, and max out at 1000 yards or so, although some may argue that point.  Good Luck!

Bertus:

If this is a commercial application the usual way is to utilize industrial broaching technologies.  If it is commercial, I can put you in touch with a broaching expert.   Let me know