Well depending on the metals in your loop you might not need much or any antifreeze at all. If your using a 50% mix then you're using too much
If you have an all copper and brass loop then regular distilled water is fine. If you have any aluminum in there you do want to add some antifreeze but I'd say only about 1/10 of your coolant should be antifreeze. (1/5 if its the premixed) You might want to add some algaecide or silver to your loop if you find any bacteria. (by silver I mean putting some silver wire in your reservoir)
I don't think the dremel drill bit is going to be big enough to make #Rotor's block but maybe you can use more smaller holes closer together or better yet cut the copper with the dremel. If you look around I bet you can find a used drill press or a table top drill press pretty cheap if you decide to get one.
Heres an article from OverClockers.com about bong cooling compared to a heater core
http://www.overclockers.com/articles389/index.asp