Handy tip for next time. Cover the area to be drilled with masking tape, rubbed down pretty tightly. Then, use a forstner drill bit. A forstner bit looks somewhat like a regular bit except at the very tip, where it has a squared-off cutting edge that will cleanly cut a circle as the bit begins to penetrate. You can get clean cuts in most painted woods with one (if the guitar is particle board it might still chip).
You also want to drill as nearly perpendicular as possible with the forstner bit, to prevent chipping. It sounds like you have access to a pretty good shop so I'm sure there is a drill-press lurking around there somewhere.
BTW, very nice idea and very nice work. I've been toying with the idea of converting one of my electric guitars to a five string "octave mandola" but leaving all six tuners in place and doubling the high string. I figured I'd tune it C G D A EE but I was kind of concerned about the long scale tuned in fifths. I never would have thought of getting one of those little "kiddie guitars." You just saved either my Tele or Strat the indignity of being carved up.
Gee, maybe I'll get one of those cute little pink "daisy rock" guitars and...nah, not gonna happen!
John
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