It is conventional woodworking practice to make plugs from the same wood as the piece to be plugged, and to orient the grain of the plug parallel to the grain of the workpiece. You will see this technique used lots and lots in traditional wooden boat construction. As you might imagine, stability of the plugging through severe ranges of moisture-content cycling is tested to the max in the marine environment. It is common to see these plugs just as tight after fifty years of service as when they were first set. Sometimes, with enough luck and skill and sharp tools, they can be almost perfectly matched, nearly invisible. Dowels, on the other hand, are fairly accurately dimensioned cyllindrical sticks of wood. The hardware-store variety are often birch, sometimes imported soft hardwood. There are lots of uses for these in woodworking, but they are not the best answer for plugging, nor for stripped screw hole repairs; in both of these cases the grain orientation will produce a poor result.
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