I think the small holes that remain after turning will give the piece "character".

I agree; the exit holes created as adult beetles leave the wood does give the finished look some character. That being said, we don't want any of these pieces providing the structure with live beetles so some treatments will be needed to insure this doesn't happen.

Regarding warping; when done properly this should not be a problem. I've treated lumber as thin as 1" thick pine that was very dry and there was no sign anything was ever applied once dried and cured out. I'm sure the same result would be achieved in your scenario. And this should be true whether you treat before or after turning the wood.

Additionally, the treatment soaks "into" the wood and does not lie on it's surface. If the treated lumber is left unfinished it would be safe to use for any purpose once allowed to cure (which generally only takes a few days; 1-2 weeks max). And if the wood is to be sealed there would be no chance of unwanted exposures.

As for the treatment option; no doubt the BORACARE would be the best option. As is the wood would probably be in it's easiest shape to treat. And since Boracare is virtually odorless, the wood can be treated inside since most of the country is a bit cold right now. You don't cite how much wood you actually have but if needed we can help you calculate how much will be needed.

Here are direct links to the information and products listed above:

Boracare:  http://www.bugspray.com/catalog/products/page52.html

Powder Post Beetle Article:  http://www.powderpostbeetles.com/powderpost-beetle-control

This is entirely up to you. The wood definitely can be purged of all insect activity if that's what you're asking. Once rough cut, you could treat it will some BORACARE and let it cure for a few months. If done properly, the boring larvae would surely die and the Boracare should be able to provide protection for several years to come. But the real question is two fold; is the wood damaged so badly that it's not practical to use and is it even worth the time and effort to make it reusable?

The first consideration is a tough one. Many people like the way insect damaged wood looks. They feel the boring pests help to give the wood a certain character and presence which for some living environments is a desirable feature. But clearly it can get to a point where the damage is so extreme the wood is not able to function structurally. This you can generally ascertain upon the initial processing of the tree. At that time you can tell how badly it's been infested, how much damage the wood boring pests have done and whether or not what is left of the tree can be used for your project.

The second thing to consider is whether or not the wood is even worth the cost to make it usable. Remember, Boracare will cost as will your time and effort to do the treatment. Again, if there is a lot of wood and it has a certain look you desire, it can be saved. But in the end, only you can make this judgment call. And don't be afraid to give us a call if you'd like to  discuss this further; our toll free is 1-800-877-7290.