Magnetic insulation

I have seen a cutting tool height gauge made by Joe Pieczynksi on Youtube. Another made one that the lower half was aluminum with a strong magnet inserted so as to hold it in place. I would like to make a similar one but not use aluminum on the bottom half because it will be top heavy. Drilling steel and inserting a magnet will probably dampen if not cancel magnet attraction. What would be best to insulate the magnet from the effects of the steel? Anyone have any ideas?

Steel may ENHANCE the magnet. If the magnet is cylindrical, set in a cylindrical hole, then making the hole larger in diameter than the magnet, but the same depth would be optimal.

So a non-magnetic liner around the outside of the hole (not the bottom) would let a magnet with one pole on the bottom of the hole, and the other on the face, carry the field through the steel from the rear magnet face to the work surface and return to the face pole through the work surface.

A close-fitting hole may cause some magnetic flux to short circuit through the steel. Some non-magnetic material gives an air gap to discourage short circuiting. The gap should be larger than the probable gap from the magnet to the work, and steel base to the work.

Brass or copper base rather than steel?

As per JST use the steel base, with a ring of brass, Al, or even plastic as a press bushing to both locate and create the magnetic gap needed for best operation.

I'm no engineer, but my understanding is that magnetic fields can be said to behave like circuits. The material they're passing through and the field strength determines the field density. Changing the geometry of the permeable material can "conduct" the field to different places by concentrating the bulk of the flux through the permeable mass.

E.G. insetting a North-South button magnet flush into the surface of a block iron will create a pull if another piece of steel is placed atop the first to "close" the magnetic circuit - much moreso if a non-permeable "insulator" is provided around the radius of the magnet so some of the flux doesn't just short-circuit north to south through the piece it's inset into.

At the same time, when the magnetic circuit is efficiently closed by a sufficient amount of material of sufficient permeability for the given field strength, very little stray flux will radiate outwards to attract other ferromagnetic materials. Sort of like how shorting out a car battery drops it's voltage to zero - shorting out a magnet drops it's available useful flux to zero. I believe this is the general concept which switchable magnets rely on.

As mentioned, let one pole of the magnet rest against steel, insulate it's radius with a non-ferrous bushing and bring the other pole into contact with whatever it is you're trying to stick and it should hold pretty well if my understanding is correct.

So if I took a round super magnet 1/2" in dia. about 1" long and made a flat bottom hole (drill and finish with end mill) the same length as the magnet so the end of the magnet is flush with the bottom and made a bushing to hold the magnet on center and a little epoxy to hold it in will work? What is the best material for the bushing, plastic, aluminum or maybe copper? Bar OD 1-1/2"

don't need to be that long

look at the estimated pull forces here
Neodymium Cup & Hook Magnets - Magnetic Cups - Applied Magnets - Magnet4less
typical length to diameter ratio is 1/3rd to 1/4th

here's another example: (i'm assuming this pull force is the magnet fixed to a flat plane mild steel surface, then pulled away)

N40 NEODYMIUM MAGNETS 1/4 IN X 1/4 IN RARE EARTH CYLINDER
Pull force: 5.1 lbs Magnetized through 1/4"

RARE EARTH NEODYMIUM MAGNETS 1/4 IN X 1/2 IN CYLINDER N42
Pull force: 5.5 lbs Magnetized through the 1/2" thickness
only 10% improvement from a magnet twice the size.

With the backing of the steel guiding the backside field around, the forces will likely be well over twice what is given for a bare magnet.

Bushing can be anything that is non-magnetic, and strong enough to contribute to holding the magnet in place. Metallic will likely be the strongest.