With apologies for resurrecting a dead thread...
I didn't want to take the risk with a drill, so I took the guitar to a luthier who drilled out the hole for me. So far so good.
But now I have a different problem - the pickup is an L R Baggs M1 Active soundhole one, and the strapjack which comes with it doesn't fit lengthwise - when inserted from inside the guitar, not enough of it sticks out to attach the strap button reliably. This is the case even if I remove all the extra nuts and washers from the inside end of the strapjack, though the pickup instructions suggest that these shouldn't be removed.
I guess this is because the block of wood inside (the "end-block"?) is too thick/long to accommodate the strapjack supplied with the Baggs pickup - but the pickup is a very popular one, so if this is a straightforward incompatibility between Avalon guitars and these pickups, I'm sure I can't be the first to encounter it.
Any suggestions? I suppose I could ask a (well-insured) luthier to widen the hole a bit at the neck end, but that would be a tricky operation to do when you can't see the thing you're drilling.
Or can I obtain a different strapjack assembly which will work with the Baggs pickup? It has a mono 3.5mm plug on the end, and presumably some kind of power switch in the socket, though I haven't checked exactly how it's wired.
Or am I missing some other obvious solution?