Marvin, I ended up using the same thing - a craft knife with the pointed blade and ended up having to rush my headphones to Grado for replacement drivers. The point of the knife went into the area a bit too far. I've found that a regular BIC ball point pen works the best. Yes, a $.29 cent pen, because the point isn't as sharp as the knife or the lead of a pencil. Plus, the depth is somewhat controlled by the tip of the pen. Basically, you only need to slightly puncture the fabric and then with the tip of the pen, work on the top of the surface to open the holes a bit winder. Then, you're good to go.
The headband looks really sweet. Nice and custom made. My Magnums (2nd set) have been burning in since Saturday - straight around the clock to some Acoustic Alchemy. So, you've ordered some "pants" to make the "Y" joints on your cables? I haven't found a place that has 'em, so I've basically just made my own with shrink tube and they turn out pretty good. I usually cover each wire with its own individual shrink tube, then cover the joint with a larger diameter shrink tube and things pull together nicely. Sometimes, there are some "thin" areas where I've soldered all the wires together. If this is the case, I apply a few wraps of electrical tape to make it the same thickness as the wires. Then, when the shrink tube shrinks, it looks all nice and even,.
I've been happy with the Cardas quad and I have some smaller pieces of Mogami quad that I'm making some smaller cables to link my portable player to the O2 amp. One of my Cardas cables that I have with the Iroko cups, I covered with some tweed sleeving - which classed up the cable a bit over the basic black. On Friday, when I get some time off, I'll have to post some pictures when I can take them outside because the inside shots don't really represent how the colors really appear.
Keep up the good work ... and keep the motivation up in the DIY forums here.