I can understand Bri your reservations regarding making soft jaws it really is only a practical proposition if you have a chuck for which soft jaws cannot be obtained, especially at £25 a set.
Paul is perfectly correct in his explanation of how the chuck should be clamped though as the jaws are soft then they can be turned rather than ground.
As I understand it you wish to produce the steps on the outer ends of the jaws for eventually clamping into internal diameters. This is marginally easier than machining the other end of the jaws. Wind, say three loops of steel wire, about 1mm diameter, around the outer end of the jaws and against the chucks face. Twist the two ends together to make it secure and then tighten the jaws into this by opening them up. With that done the the steps can be turned using normal methods.
If you wished to machine the inner end of the jaws a plug, onto which the jaws would be tightened, would be added. This would have to be as far back as possible still achieving a secure result, and the inner faces of the jaws machined. The result would be that a short un-machined portion would remain. The jaws would then have to be removed and this milled away.
There are some pages on my website explaining how to use soft jaws conventionally. Whilst this is not what you intend the explanations given are equally applicable to your situation. This can be seen here **LINK**
Incidentally, do you have a set of soft jaws, if not then you should have purchased a second set. I worked without them for many years but now wonder how I had managed without them.
Just in case some readers are not aware of the pages on my website that you mention they can be viewed here **LINK**
Harold