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I use 10thou brass shim, drill the 1/16" hole then use a standard paper hole punch to cut the washer, tap if back flat with my peening hammer, then I give them a quick rub on the 2k wet & dry, good...

http://straightrazorpalace.com/workshop/111713-diy-cutting-inlay-strips-inlay-engraving-jig-2.html

This link is to a post I did with dremel bit I used

+ 1 for the dremel bit I use a stone grit cone piece and a tungsten burr also that works well also