Cowman, another supplier we use regularly that only sells to the trade has diamond coated twist drills as well as the rod drills. They sell individual sizes as well as sets. They are a little more expensive than the rod drills, but may work better. We order from them once or twice a week, so I could add either onto one of our orders for you.
Save any minimum order hassles and shipping charges for a separate package.

Tip: with solid carbide burrs make sure the burr is spinning when you touch it to the piece, don't start it in contact with the piece or it will chip. They like high speeds so use in a dremel or other high speed tool.

AX, thanx for the advice and you are very generous with the offer. After looking at the website I thought I'd look around locally to see if I could find the same bits. Harbor Freight had a cheap set for $5 (4 of varying sizes). I tried them on a spare trash shaft and they seem to work fine. Slow but they do cut. I started working on the Mustang output shaft tonight and got about half way through the needed depth before the cheap HF bits wore out. Figure I can buy another set tomorrow and should be set to go.
I'll post a pic of the Mustang shaft as it is now in my gallery. Should be able to get this tranny together soon. :-D

try placing the shaft in a dish of water to cover while you drill it so the bit stays cool and lubricated and won't load up. That's what we do when we need to drill a stone so as to not crack it.
(Aside: did you know you can cut window glass with a pair of scissors without breaking it if you do it underwater? Good bar bet!)

I finally got the hole drilled. Got another set of bits from Harbor Freight and continued the process. I didn't use the water trick as the shaft is still in the tranny. I did keep the bit lubed with cutting oil and that did help a lot. Since these were cheap (read made in china) bits, I really didn't expect them to last long. But they got the job done. I now have the shim for the speedo gear clamped in place with JB Weld adhesive 'tween it and the shaft. Tonight I'll slide the speedo gear over the shim and snap in the retainer spring (using my newly drilled hole). Should be able to reassemble the tranny after that and start looking at getting it installed. Again AX, thanx for all the advice. Big help.

NOW, about that cutting of glass with scissors underwater....... how thick the glass and what kind of scissors? Ya know I gotta try that one now :-D

Just ordinary window glass like they sell at the hardware store for house windows. Scissors: again ordinary household shears like you might use to cut out coupons or fabrics, the sharper the better, but not serrated. Fiskers work real well. Hold the glass and the scissors under the water. Try trimming the corners off a square to make a circle. You can't cut it in two like a piece of paper, but you can nibble it down without it shattering.