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I don't think a Dremel is the way to go for cutting rebar - seems like it would take a very long time and you'd have a lot of broken blades. A RotoZip would be a lot better with a metal cutoff wheel and it should be good for small projects.
The fastest way is with an angle grinder and a cut-off wheel.
I think the Dremel could do it, but you probably will go through many wheels and take a long time.
A hacksaw can do it, too, but if you have a lot of cuts to make - it will be a tiring exercise.
Harbor Freight quite often has the 4.5 inch angle grinder on sale for about $20, and all kinds of wheels for $1 to $6. Just bought a back of 10 wheels for $10 that had cut-off wheels, grinder wheels and flap-sanders.
Used several wheels cutting over 100 ft of 3/8 rebar a couple of years ago. Started with a recip saw and metal cutting blade, but it was slow and destroyed the blades pretty fast. Only took seconds with the angle grinder.
I'd say you have to cut almost all the way through. Rebar is pretty tough to bend even with cutting halfway through (as I remember it). I used my RotoZip but an angle grinder like Bubba mentioned would probably be a stouter tool if you had to do several rebars.
If you had a lot of rebar to cut I'd rent a rebar cutter (maybe HD rents a tool like some of these pictured in the link).
A masonary blade for your circular saw will do it - get as thin a blade as you can - should be about the thickness of the saw blade. Be sure to secure the rebar and cut straight to prevent breaking the blade and let the blade make the cut - don't force it.
One other word of caution - the cut ends will be HOT! Wear gloves.