Use the template for sure... But i wouldnt drill the holes for the folder pins with a 100%size drill bit.. I would start at about 65-70% of the hole then do as fargo says by carefully opening up the holes with a dremel or similar tool. That is the best way to make sure you get as little slop as possible in the folder. Mine came together tighter then some of the "commercial" ones I've seen and its just because of this hyper careful technique..
Good luck man.. I sweated THE MOST while I was drilling out the receiver for my underfolder...It was kinda nerve racking actually.. but.. I got thru it eventually with no problemos.