Decided to just wait to comment on this thread until we finished. We chose the first option of tapping the holes and using a soldering iron to burn holes through.
It was a great experience learning how to tap holes and it allowed us to end with a much more robust product.
Here is a video of the lift working.
https://youtu.be/0oAcXcJqIbg
Here are some pictures of the finished spool
We are going to do some finishing touches like adding the ramp (which is why the motor is not lower in the Chassis and possibly adding intake rollers.
Thanks everyone for your suggestions. This is the first bit of success our team has had in years. A lifting robot may not mean much to a lot of you but to us its awesome.
There is going to be a reveal video sometime late this week!