Turns out I made the same mistake: I tried to use a 'wood axe' to chop up the log (seems like it should work, right?). Turns out that, too, is a two-handed weapon, explaining why it doesn't work. Maybe a note should be added about this in the FAQ, since it's extremely counterintuitive?

This still doesn't explain why skulls can no longer be ground up using the mortar, though.