Got my control panel drilled out, good clean cuts, happy and very relieved.. Decided to go with 1 3/8" holes, hopefully that works out.. if the Dominux8 could work in 1 1/8, and is suggested to work in 1 1/4, then surely the original hole size for Robotron of 1 3/8" will be a piece of cake to allow the joysticks to work as designed!!
In case anyone cares..
I applied the control panel overlay, then took a hole punch and marked the center of where I want to drill, put the tip of the forstner bit in the indentation, got the drill up to full speed and went straight down with some pressure, not letting up until it was clearly thru the overlay material and into the wood. Same thing for the holes for buttons and joysticks.
got good clean cuts, hope everyone has the exact same results!!