Norbs,
I considered bushing the lifter bores in my S1 block to avoid the lifter hemmorage at higher lift. Even at lower lifts if you float the valves, you could uncover the oil feed and bleed pressure.
I couldn't find anybody competent to bush the lifter bores. It really take a specific jig/fixture to do them right. BHJ makes such a fixture but it ain't cheap. So I decided to go hydraulic. I ordered my cam, got the lifters .....then I stumbled onto a new S2 block!
I regret buying a hydraulic roller cam now because I had a lifter on the dyno that wouldn't stay pumped up. My cam grinder (Erson) told me I could put a solid roller lifter on my profile and lash it at .006-.007. That is were I'm at now. I wish I had just done the solid roller from the start.
To answer your question, you don't need huge holes in the lifter bores, just enough to oil the lifter bore and send some upstairs to the rockers. .125 ought to be more than enough.