Hi Gwyn. You're absolutely right to say it improves the look of a kit.
You will definitely need a pin vice and a set of small drill bits (John has both of these in his shop. I'd recommend the Microbox set and the double ended pin vice). They're not expensive and you will find other uses for them. Whatever you do, DON'T use any kind of power tool for this. The holes you're trying to drill are tiny so you're not going to save any time or effort, and power tools will be much harder to control accurately.
1) Make sure the end of the pipe is flat and square.
2) Mark the centre of the piece you need to drill out. I do this by eye using the point of a No 11 blade in my knife, but you could use a needle or sharp pin. Try to get this as accurate as possible. Your mark should create a tiny hole in the plastic which will make sure your drill bit doesn't slip when you start to drill.
3) Start with a fairly small diameter drill bit and drill out a pilot hole 1 - 2 mm deep. This will enable you to check you're drilling straight and in the middle - if you're not exactly centred, don't worry, you can fix it later (see part 6). Gradually increase the size until you get the desired result. Keep your drill lined up straight with the pipe to ensure you don't drill through the side.
4) Unless you're very steady and sure about what you're doing, don't try to drill the hole to get the walls of the pipe very thin and to scale. It's much better to leave the walls of the hole slightly too thick rather than risk the plastic tearing or going through the side.
5) You only need to drill your hole a millimetre or so deep - the larger the diameter, the deeper your hole needs to be. Even with the larger sizes (up to 1.6mm in your drill box) you will only need to drill 3 - 4 mm deep.
6) If you find your hole is not absolutely in the centre, use the point of a No 11 blade and gently enlarge the size of the hole by spinning it like a drill and scraping away the plastic. Keep the sharp side of the blade at the place you want to remove the plastic until the hole looks central. GENTLY DOES IT with this bit!
Sounds difficult I know, but a little practice will show you it's nowhere near as hard as it sounds. For practice, cut some short lengths of round sprue of different diameters - don't use hollow sprue sections: that's cheating!