12" is not cheap indeed, don't know the price for it - but there are some smaller diameter solid carbide discs used in metalworking and model making, will try to find a price. If you have plenty of speed you can go smaller on the diameter. Not trying to open your wallet, just exploring alternatives.
Something like this:
http://cgi.ebay.com/80x0-8x22-SOLID...main_0?hash=item27ac4291fb#ht_500wt_1100

http://cgi.ebay.com/Solid-Carbide-S...main_0?hash=item439aafd80f#ht_500wt_1100

Another thing: if you're worried about melting and you have an air compressor - just set up a jig where a nozzle sprays air directly on the blade at the cutting tip - works great, cnc-ers cool their tools that way while milling Alu and steel.
regards