For the lengthwise cut, I used a rotary tool with a cut off wheel. I can't stress this enough - PVC is very gritty when being cut with this tool. Wear your glasses and a dust mask, and expect a pretty good mess when you're done. I've heard a lot of discussion of Dremels burning out. PVC is pretty easy to cut, just let the blade do the cutting.
The next part is to cut a guide line for the grooves. Again, I used my razor saw for precision.
Once the guide lines are cut, I used a flat file to create a V groove. Using the corner of the file, cut in long smooth movements to keep the depth even. I had to rotate the cylinder several times to complete the groove around the PVC tube. Be careful and let the file do the cutting as PVC is soft enough to cut through all the way if you apply too much pressure. When you're done with this step on all of the grooves, clean up the entire part with some sandpaper. I recommend 220 or finer.
Close up of the V groove. This was prior to me cleaning up the groove with some light sanding. The actual cut is very straight.
The last step for tonight is to cap the ends. Since I have leftover scraps of .040 styrene from my skins, I traced the PVC tube end on the styrene, cut and glued. I have been using Amazing Goop for plumbing. It sets in about half an hour and when it cures, it's near impossible to separate the two pieces. Make sure you have good ventilation when using this stuff - it's pretty potent!!! Oversize the cap a little, this will be trimmed with a utility blade after the glue dries.
These steps took about an hour to complete to this point. Let the part sit and cure. Next up, the tabs on the end of the cylinder.