[sanddrag]

For Loctite, 680 is good stuff. It's the green gap filling formula. I wouldn't necessarily use it to hold a gear to a shaft rotationally for instance, but man, that stuff does not budge once cured. I once glued a steel gear to a steel shaft with it and it took about 5 minutes with a propane torch, a vise, and the biggest pair of channel-locks I had to get them apart. Good for holding in bearings when you mess up the press fit tolerance.

I remember Mike from 233 telling me he would have gearbox plates waterjetted with the bearing holes a little undersized and simply run a reamer through them on a bridgeport while letting the plate "float" on the table. I was surprised they could hold an accurate enough center distance that way but apparently it works.

A 1 1/8" silver and demming drill will not make a 1.125 hole, nor will it make a round hole, especially in 1/4" just due to the size of it. The tip of the drill is more than 1/4" tall. You can do it, and it will work, but the hole won't be great. You'll be lucky if it ends up 1.127 which is a bit sloppy. You'll have to run down somewhere around 250 RPM too.

If you're working on a manual mill I suppose you could drill and ream. Do something like drill 27/32 or 55/64 for the 7/8" OD bearing and then ream to .875ish and likewise (a 64th or a 32nd undersize) for the 1.125 bearing. They make reamers that are .0005 undersize.

You perhaps could try something like a TCT hole cutter to do it all in one shot. I don't have experience with them though. I'm guessing your results would be better with a reamer.