Glenn Herbert wrote:Jaime hasn't posted since 2012, so he probably isn't going to see your question.
I would probably drill a pilot hole, then use a scrollsaw/saber saw/whatever name you know it by, then file the edges to clean up.
And to answer the question you didn't ask, I wouldn't try to copy that build for a permanent installation. A 3" stove isn't going to put out a measurable amount of heat without feeding round the clock, and the metal innards will tend to conduct heat away from the combustion zone and cool the already tiny fire. If you want a small RMH, you need a highly insulated combustion zone of refractory (ceramic) materials to allow enough heat buildup for complete combustion and withstand the corrosive atmosphere inside a high-temp fire. Without complete combustion you will get creosote in your chimney and in any heat transfer ducts.
How small is your small house? There have been a few 4" systems successfully built and published here.