Don't bother with 1.25, you want coarse threads in aluminum.
I've never drilled ALL of them out, one of my car has 2 drilled to m10, never had any issues. The annoying part is some of the manifold gaskets are borderline impossible to make the hole larger on them. I would hate to have to deal with all of the gaskets. Don't go any deeper then the stock studs, they have more than enough engagement. I can't remember exactly but some of the holes on the manifold are smaller and will need to be enlarged I think.
The best way to do this is with a fixture, as you can easily walk the drill or drill it at the wrong angle, and if doing in the car, some require a right angle drill. I think I went with a size smaller drill bit than called out on the chart since hand drilling isn't very precise.
Current motor build will probably have inserts drilled and tapped into the head and new studs in the stock size used, fige used porsche studs that have an allen on the end for install, and new copper flange nuts.