I've used a lot of N-Gravers cobalt and carbide engraving bits.
http://www.ngraver.com/cutters.htmI see they're .085,,so they are actually a little smaller than 3/32 square which is fine with me. I don't like all the extra width at the point anyway. Using an 1/8" square bit, I just grind that extra width away.
The Cobalt HS steel will work for anything here. Unless you feel the need to cut through the skin of case hardened parts,,then they will generally fail after a few hits.
Engraving right through CC/H isn't considered the best quality work anyway and it's generally only found on cheap quickee work.
The carbide bits they offer cut Winchester 21's well,,one of the ultimate tests it seems. Some of those original mfg frames still resisted and had to be annealed a bit. Nasty things to work on w/a hammer and chisel, but they file, drill and mill just fine. Go figure.
The new production stuff is 8620 and not bad to cut at all.
The Lindsay proprietary carbide bits ,'Carbalt' I think they are stamped w/o going to look at them are very good. Not as brittle as the ones from Ngraver. You need either a diamond wheel sharpening set up or silicon carbide as you do for the above carbide.
Lindsays HSS gravers are excellent for general work. I've cut entire 25hr jobs with them and never resharpened.
Lindsays tool bits are a true 3/32" square I believe.
I don't fret over small stuff. I just lock one into the handle and cut.
My preference is for the smaller square tool,,but if not available, I've used the 1/8 bits too. You might like them better. Everyone is different.
At one time I used 1/8 round Stellite steel stock to make engraving bits. Lots of extra grinding and polishing to take them to shape from the round. But that's what we had,,that's what we used. They do make great under cut punches and still use a couple of them today 40+ years later. They're a bit shorter than they used to be.