As for fireforming your .218 Bee cases, you definitely do NOT want to fire undersized bulleted ammunition in the .25-20 chamber. Such practice is known to bulge or dent the barrel.
This is the first time I've ever heard this. Firing surplus .223 ammo in 7TCU barrels was a popular way to make cases for IHMSA competition years ago. No one I knew who did this suffered from a
bulged barrel - and I cannot envision circumstances where this could ever occur. It did foul the barrel with jacket material, but no damage was noted.
The main problem with the .218 Bee cases is that they may not fit in the chamber. The shoulder on the Bee case is farther forward than on the .25-20, and depending on chambering specs the Bee may not enter the .25-20 chamber fully. Personally I'd forget the Bee cases and buy the correct stuff from Midway, etc, or do as the poster above suggests with the case filler - but run the empty Bee case through the .25-20 sizing die first to set the shoulder back.
I've had an 1894CL in .25-20 for 15 years and it is a fine little rifle. I prefer loading the 75-grain Speer FP, a very accurate bullet. Best accuracy comes with 6.0 grains of AA-7 powder at 1481 fps - a pleasant, accurate, and powerful enough load for small edible game. The wide flat point on the Speer kills well without damaging a lot of meat. Top power is with IMR4198 at 1943 fps, although accuracy was not great. The Hornady 60 grainer has not been that accurate in my rifle, although 9.0/H110 gave 1897 fps and sub-2 moa accuracy.