I finally got my hands on a few different types of tube/sleeve/barrel nuts and did some experimentation with some old letters and some scrap sheet metal. I learned a few things as well as ran into more trouble:
(1) The diameter of the "padded" head on the barrel nuts from AMK is slightly smaller than the NOS ones you'll find on ebay. This helps if you want the padded feature without it being visible once the letter is installed.
(2) The padded head peels right off of the NOS barrel nuts, should you not want that feature.
(3) for the 3/32" studded letters which use a 1/8" barrel nut, experimentally I have found that drilling a 0.128" dia hole is the sweet spot. You can go up to a 0.135" dia hole, which makes it easier to push the letter into place, but sometimes the barrel nuts are a little loose afterwards
(4) Heat from a heat gun will allow you to very slightly bent a letter pin so that they fit into the holes better
Now for my new-found problem:
The factory barrel nuts appear to be designed to work with panel thickness (sheet metal + paint) up to about 0.045". Anything thicker than that and you're screwed.
Even though I have a CA car without any rust whatsoever, I have discovered that someone (me) got a bit carried away with sprayable body filler. In short, the areas where the ford and mustang letters go have a LOT of polyester under the paint. It's very difficult for me to measure, but I estimate that the sheet metal + primer + filler + sealer + base + clear totals somewhere in the 0.050" < X < 0.100".... lets say it's 80 thousandths.... WAY too thick for the barrel nuts to work.
I tried an experiment... I took a scrap of sheet metal, drilled the holes for one letter, then added 0.100" layer of bondo on it. I even painted it to make it easier to see paint cracking. Just as I thought, the features in the barrel nuts that are designed to grab the sheet metal are too shallow to work in this application where the paint is thick. One of two things happens: (a) the letter installs but the barrel nuts will fall out of the holes with little effort -or- (b) the barrel nuts crack the bondo during installation.
So now what? Any suggestions? I found what appear to be longer barrel nuts (and ordered some) but they don't appear to have any feature to grab the sheet metal. Am I stuck to using glue to affix the NOS letters to my hood and deck lid? Or, do I have to resort to the undesirable "stick-on" letters?
The only other thing I noticed, which I don't really want to use on this car.... is that if I first install the barrel nuts to the letters, I can carefully add a drop of instant glue to each barrel and insert it into my test piece (sheet metal + thick bondo). Then, the letter + barrel nuts is stuck there very well. The down side is that you get one shot at it... if you try to remove the letter, the glue is stuck to the stud, barrel and bondo and any attempt to remove the letter pulls a large chunk of paint & bondo with it.
Suggestions?