My holes cleared the lug and I didn't have to do any modification to the lug itself.
IIRC, I used this 5/16 x 17" drill bit: http://www.homedepot.com/p/t/2022141...1#.UUI25Bx9Pl5

I did not have to remove the interior webbing as I wanted to keep whatever internal structure I could. The sanding and finishing the ends was rather easy. I gooped over a bunch of partially hardened JB weld, let it harden for a few days and then sanded. You could simply paint the entire stock with black paint or bed liner or undercoating and leave it at that if you wished.