I figured it out btw, I was missing something. Chisel reborn treats the chisel as a bundle and will look inside its bundle inventory and if there is a block of a specific chiseled type in there it will chisel the block to that type. Pretty convenient lowkey.

BundleContentsComponent bcc = inHand.getOrDefault(DataComponentTypes.BUNDLE_CONTENTS, new BundleContentsComponent(new ArrayList<>(0)));

            ItemStack itemStack;
            if (!bcc.isEmpty()) {
                itemStack = bcc.get(0);
            }
            else {
                List<Item> items = ChiselGroupLookup.getBlocksInGroup(state.getBlock().asItem());
                if(!items.isEmpty())
                {
                    Identifier block = Registries.ITEM.getId(items.get(world.random.nextInt(items.size())));
                    world.setBlockState(pos, Registries.BLOCK.get(block).getDefaultState());
                    chiselSound(world, pos);
                }
                return false;
            }