i have found that hole in the case is already the correct size for the 1/8npt tap.
i use a recessed hex plug, which is roughly 1/4" long.
when tapping the case, tap just enough so the plug goes just below the surface without you having to crank on it with a two foot cheater bar.
in other words, it should screw into the case easily with a shorty allen wrench, and doesn't need to be tight, just slightly snug.