If you want to drill hard steel, you are going to need to use a slow speed combined with lots of feed pressure. Make sure you are using a quality bit that is sharp - drill bits are someting to avoid a "deal" on! Lubricate it too. Start with a small bit and work your way up, this reduces the amount that needs to be cut on each pass. It shouldn't be too hard since the pilot hole is already done for you, no forming process is happening, just cutting.
Mind you, if you don't have a drill press, the dremel with an abrasive bit is probably the way to go for such a small finicky thing.
My aperture was also below centreline.
I never liked my rear sight because I thought the aperture was too big, and the sun would glare on the back of the sight and inside of the aperture. I wrapped a piece of painter's tape around the sight to make a mould, and then poured some devcon in, pressing it in with a greased piece of modeling clay. I repeated this on the other side. After it set, I used a needle file to shape it into a cylinder about 1/4" long. I borrowed a 1/32nd drill bit from a machinist friend, and drilled through where the aperture was before (the original hole was about 1/16). If I did it agian I might even try 1/64th. Then I drilled a shallower depth with progressively larger bits, creating a stepped sunshade on both sides. A tapered sheet metal reamer might have worked too, but I couldn't find mine. All that's left to do is paint it with flat black model paint.
I modified the front sight too. Instead of being parallel at ~0.070, I filed it so that it tapers down to 0.030. Then a coat of flat black model paint gets rid of any glare.
