I think the hole saw will work, but I would suggest a step drill for the outside sheet metal. I found some good used step drill bits at the local pawn store. They work great for drilling metal. I recently completed my all grain mash tun and used a step drill bit to drill all the holes in 316 stainless steel 1/8" thick. No burs, clean hole. I have two bits one that will go up to 1/2" in 1/16" increments and another that goes up to 1" in 1/8" increments. Once through the metal you could use the hole saw or even a spade bit if you are being careful. I have found that a good filler for torn insulation is a can of expandable foam "The Great Stuff".
Good luck,
Dirty