Do I need a new tool?
 

I need to cut a rectangle out of chipboard that's in a very awkward location.
A total of maybe 4 feet of linear cutting. Would the standard spiral cutting bit on a Dremel do the job, or is chipboard too heavy? I'd rather not have to buy a jigsaw and work with it in this awkward location.

Yes it will work just take a little out at a time so your not overworking the tool or the bit.

I dont see why it wouldnt work either...like Daryl said, take you time.