"We" got into a huge mess about this some time ago. A 1/8 hole is NOT going to affect coolant flow to any measurable degree. What it WILL do is GUARANTEE that air will burp out the top of the stat. Years ago, I nearly "het up" my 440 when I installed the Sig cam. Fortunately, I thought about checking the heater, even though it was about 80* in San Diego, and NO HEAT. I quickly shut it down, removed a heater hose, and proceeded to put in some more coolant.