I too used regular steel drill bits. I don't think you need the expense of a specialty bit like a forester bit (unless you want another reason to increase your tool collection!)

Drill thru both sides with 1/8th then 1/4. But what I did different is to drill the 1/2 next as a counter sink, but did it in reverse so it acted more like a sander as opposed to a drill (can't have tear out if it's in reverse). Once this "counter sink" was drilled , then I drilled the 3/8 thru from both sides. This way I had a nice bevel to eliminate a sharpe edge for the toggle rope to wear on, and didn't have to worry about "tear out" as the smaller hole was "exiting" within the "counter sink". Touch up the hole with sand paper and you are ready for varnish.

Just another idea...

DAVE