Is this correct? What size saw is needed ( 16"?)
You can do it as you mention but be sure to leave enough to pare to the line. Very often I see beginners think they can cut to the line and then they make the tenon too small/thin. As to what saw you use, use the one you have and then finish with a hand saw if needed.
Can a chain mortiser be acquired used or is it likely to be burned out from use?
From time to time used chain mortisers do become available. Recently I helped two different framers sell two machines to two others. I can watch for one for you....
