Thanks everyone!
GB's just about right on with his guess! The idea came from Fox Chapel's "Big Book of Scroll Saw Woodworking". The letters are cut out, then the high points between the letters are trimmed down to keep things manageable for the next part. A 1/8" round over bit is used around the inside of the hole left behind by the letters. The book says to use a backer, but since this isn't really a puzzle and I didn't want the letters to come out, I simply laid the lid on its face, put the lettters back in place, and used a glue gun to apply hot glue to all the areas around the letters where there weren't any gaps.
Font used was Cooper Black, I think around 150pt size. Just use your word processing software to shrink the letter spacing down so the letters overlap. It's all quite easy and I thought it came out pretty neat!
It's all pine except for the peg board back side, and I used pocket holes to join all the pieces together. Finished with 3 coats of Danish oil.
Glen