Aaron,
I've drilled and tapped several heads for the large temp sender with the LS retro swaps I've done for myself and others, while the engine is assembled. It's really not bad at all, however I have the engines out and on the stand and do it before I drop them in.
I've bought alot of complete and perfectly running LS engines so disassembly isn't in the cards. Since they have metric threaded holes, I drill and tap them for the standard pipe to install factory senders so original gauges in the classic vehicles work.
All I do is grease the drill bit, and pull it every few seconds to clean and regrease, and work slow. Do the same with the tap, every couple revolutions I clean and regrease and work slow. I've done it this way a dozen times and never an issue. I have pictures of the last one I did if you wish to see, but it's pretty straight forward. After it's up and running I flush the cooling system for any possible debri, just an extra precaution but I've never found anything. They've all run thousands of miles without complaint.
My thought process was, even if a shaving got in there, what's it going to do? Chew a water pump bushing? A water pump replacement on an LS engine is a heck of alot cheaper than $200 worth of MLS head gaskets and new head bolts (torque to yield can't be reused) needed to remove a cylinder head.
I understand a gen 1 is cheaper in that respect, but just laying out the situation I've been in countless times that forced this decision. No complaints here.
