ORIGINAL: ChuckW
The best tool to use is a stepped prop reamer:
http://www3.towerhobbies.com/cgi-bin...&I=LXK248&P=ML
You can use a drill bit but you have to be very careful since you can end up making the hole crooked or off center. If I were to use a drill bit, I'd to it on a drill press rather than with a hand drill.
You also can put the prop reamer in the drill press. Be sure and use the lowest speed and take it slow. Sure is easy on the hands!!
Happy Landings!