I have some suggestions without looking at the situation. First no oil. the pencils will soak up the oil and expand making things even tighter. Second, if he put the pencils in from the muzzle, which is likely because the gun was assembled, pushing from the muzzle to the breech/chamber will only tighten the pencil's grip.
Before taking to a smith I would try using a thinner dowel maybe 1/4"-3/8" and try tapping one pencil out at a time. It is likely that if you get one out the rest will come out easily.