What is the best tool to grind down a smaller metal rod?
You can use a Dremel cutoff wheel to cut off a piece of the rod but you may have to remove the rod to do this.  You can use Dremel grinding wheels to grind down the end of the rod.  If the rod is not protruding out of the hole, you could use a wooden plug to seal off the hole.  Sand the plug flush with the bench top.