RPM chart here http://members.home.nl/b.ollivier/ht...speedchart.htm

Bottom line you should be drilling at about 1500 rpm in steel with 1/8th drill. Dremels Usually run between 5,000 - 25,000 RPM !!

TOO MANY RPM. Use a conventional home DIY drill **slower is better**. Lubrication while usefull is not required. Spot of oil [any] does no harm.

For your engine bay. Buy a can of fuel proofer see http://www2.towerhobbies.com/cgi-bin...?&I=LXAU33&P=0 Apply two or 3 coats to bare wood. [For small areas I often just smear on some epoxy glue .]