Well, as in anything, there is the ideal, and the real.
I've used valve grinding compound. But can't say it's ideal for what you want. Don't know what kind of finish you expect, how fast you want to take off material, or exactly what material you are lapping. I'm sure there are specialty abrasives for any purpose.
Remember, lapping is a slow process, and keep the whole lap moving axially back and forth along the bearing. the lap ends should enter the bore to keep the lap wearing evenly, but not so far that you jump out inside of the bearing. housing.
Don't expect to take a lot of material off -- this is more of a finishing operation. Not sure how you're going to expand the wood as it wears or adjust it to the bore. I prefer the lead lap. But I'm sure wood is do-able, as people do use it.