Actually, I used a slightly smaller hole saw to add my shanks and sort of "forced" them in. You don't want a gap around the shanks.
7/8 will work perfect. It's a little tight but it fits. The bonus is the 7/8 can be used to drill holes for 1/2" npt fittings for a mlt or kettle.
Yes, I would exchange it. I checked on here first and the concensus was to use a 7/8" hole saw. I actually bought the cheapest one made for wood from ace hardware, it was half the price of the metal hole saw. So far I have drilled 3 holes in a metal door refrigerator, and 3 holes in stainless pots for ball valves and the bit still drills fine. So unless you have some thick ass metal get the cheapest one. Just make sure to use a little oil.
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