Hilly, I think I understand what your are trying to do here. Basically you want to wrap the tubular barrel part of that rifle and have it laced together on the underside?
First off, this is going to be a bit of a challenge to lace, once wrapped around the barrel, as every time you try to push your lacing needle through, you are going to maybe scratch the surface of the barrel.
I'd also suggest using a thin piece of leather to act as a tongue along the seam.
The best way I have found to lace something together once it is wrapped around an object, is to take a lacing needle, the real thin perma lock one, and bend it into a semi circle. If you can heat it with a propane torch at the same time, it bends easier.
This will make it so much easier to lace, as the bent needle will be able to be manipulated around easier to find the next punched hole.
You may also want to install small eyelets such as "ade" has on the cheek rest posted here. This will ensure that you won't rip the leather when pulling your lace tight, and it would add a uniform look to the seam.
Depending on the width of the space between the edges of the wrap once it is wrapped around the barrel, will determine the width of the lace you want to use. The greater the width, the wider the lace. I would say if you can, cut your own 3/8" lace from some roo hide, if you are not able to do this, then use 1/4" store bought, and punch your holes 1/4" apart and 1/4" from the edge, this should give you a nice uniform look to the lacing.
If you can get 3/8" lace, the 3/8" from the edge and 3/8" spacing for the holes.
To hide the ends, all you need to do is when you start, glue the beginning of the lace down on the underside of the wrap with contact cement, say about 1 to 2 inches in length. This will keep it from coming undone, as the glue and the tightness of the wrap will hold it in place. To hide the end of the lace when you are finished, just run the lace tail, under the lacing about 5 or 6 "Xs" back, snip it off and gently tuck it under the "Xs" to hide it.
Hope this helps
Cheers