If I may, I will throw my two cents in?  I actually do a Spanish Round Braid on most of my lacing projects.  I really like the way it looks compared to double and cordovan loop lacing techniques.  JMPO 
I also use the smaller size chisel from the size of the lace that I am using, of course I use primarily 1/8", but I have 3/32" lace.  As for the spacing, I usually use the thickness of the leather that I am trying to lace to provide me a good distance between the edge to my holes.  Naturally, if the distance seems to shallow and I believe it can cause issues, I will select a more appropriate distance.  It just depends.   
Finally, for any dark lace, I will color my edges to make sure if there are any gaps, the color will blend in with the lace. 
Anyways, it works for me, I hope it helps you.