Of course a lathe would be ideal. Don't have one, so I have done all mine with an angle grinder clamped to a flat surface - usually my table saw top.
In the pic it's clamped to a normal table to show up better, and the duct tape represents the flywheel.
It's easy to find a combination of flat stock (plywood, books, metal plate) that will raise the grinder the desired height off the table top. Or under the flywheel to get the fins cut right where you want.
I use a thin metal cutting disk. Try to get the disk as level and parallel to the table as possible. And of course clamp the grinder tight enough so it will stay put and not vibrate loose - but not too tight to damage your grinder.
Then you just hand feed the flywheel into the disk, fins facing up. I like to cut in about a quarter inch and rotate the flywheel (against the disk rotation to lessen chance of grabbing); when cut all around feed in another 1/4 inch and continue till fins are all gone.
My grinder and disk gives me about 1 1/2 inches cutting depth, a bigger disk will give more.
Make sure the back of the flywheel is flat. I've had some with a bit of casting flash that needed a quick cleanup before doing the fin grinding.