Haha, yes it's a bit of a chicken and egg situation. One common way of doing it is to hold the outer rim in the four jaw chuck with the jaws reversed and the outer rim set to run as true as you can get a rough casting to run. (Say within 10 thou to 1/64" or so). You first face off the boss and turn the boss OD if required, then drill and bore/ream the centre hole.
You can then mount the flywheel on an arbor that the hole in the boss is a tight fit onto. Either by way of a very slight taper or a spot of Loctite. This arbor is turned to size between centres first. So then when the flywheel is mounted on the arbor, the arbor is put up between centres with a driving dog to turn it. You then machine the outer rim on the OD and both sides. This makes sure the rim runs true when the finished flywheel is mounted to the model engine crankshaft.
But there are other ways. EG, you can mount the flywheel on the faceplate, clamped by the spokes with a round ring spacer (such as ball bearing outer race) between the spokes and faceplate. Set the rim to run as true as possible. Then machine the rim OD, rear face and front face. Then machine the boss and drill and bore/ream the hole in the middle, all in one set up so all surfaces run concentric and true to each other.
I have also done it by machining the face and OD of the boss and then holding the boss in the lathe chuck, with a tailstock centre in place. Machine the rim OD and rim faces and then drill and bore/ream the hole in the boss in one set up. This ensures the rim runs true to the hole in the middle but the OD of the boss may have a small runout, not particularly critical usually.
Take your pick. The important thing is to machine the rim OD and faces in the same setup as the hole in the middle so they all run true to each other — except for method 1 where the arbor ensures trueness between hole and rim.