I use an old Masterairscrew Drill Guid Balance System.   This provides a guide to put the hole right on the CG of the prop so that it is perfectly blalance.  Positioing the prop in the guid on the balance takes some time but then you can use the proivded drill to put a clean hole through the prop hub.  No sanding tips and it's possible to get the prop blanced tip to tip and accross the hub (laterally).   Unfortunately these are no longer made so finding one is difficult. 

http://masterairscrew.com/manualinst...ructions2a.pdf

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