Hello,

Every time I attempted to reply to your question I got kicked out and it said i was “not authorized to reply”.  I have been talking to others here today so . . .

Yah; OK

Well anyway every time I use router bits with plywood it eats them and dulls them and I wish I hadn’t.  So . . .

I would say a table saw with a dado blade and a fence, of course.  Put a flat, temporary (sacrificial) layer of wood on the side of the fence, burry the dado blade in that with the right amount of the blade protruding to cut the width rabbet you require.

Nice illustration that you put up to demonstrate your question by the way.

Here is a video here on Fine woodworking online to demonstrate.

https://www.finewoodworking.com/PlansAndProjects/PlansAndProjectsArticle.aspx?id=28856

Alternatively you could cut to the width you want with a regular table saw rip blade, cause it has flat top teeth and then make several passes clearing out the rest of the waste.

PS: oh well at least you see how to cut it with the router.  I didn’t find a video on the way I was describing.