I have another post running right now on a similar issue: milling a series of 1", 1 3/16" and 1 3/8" holes in 1/4" acrylic. Don't know how to link it here, but it's titled 'Annular cutters or drill bits?'. Got a lot of good responses and recommendations. You might want to look at that thread. I opted to try drill bits first, and I purchased Silver & Deming drill bits for the 1 3/16" and a 1 3/8" sizes (already had one for 1"). On a completely stand alone basis, that was not my first choice - based on all the responses, I would have purchased annular cutters. However, I have had several occasions in the past when it would have been nice to have drill bits that size. So I rationalized trying them first. If they worked, fine; if not, I'll get the annular cutters but still have the drill bits on hand if I ever need them in the future. About 2 hours ago, I finished milling twenty-one 1 3/16" holes in 1/4" acrylic. The results were amazing! I tried an experiment on scrap by milling in one pass - no pilot hole. I set the power quill on its slowest feed rate, and milled at 600 RPM's. There were no chips or cracks, so I milled the final pieces like that. All 21 turned out beautifully. I'm a happy camper.
I suspect you could expect similar results in 1/8" aluminum, but you'd probably need to modify the method a little. First, I did not use a backing piece on the acrylic. My strips are long and narrow, so I simply blocked them up in the vise and drilled straight through. To hold a piece of 1/8" aluminum stock securely, you may run into a crimping issue (maybe not). Second, I think I'd be more inclined to start with a pilot hole on aluminum. Probably not a big issue, but there'd be a little more chance of wandering and/or grabbing in aluminum than acrylic. Finally, regardless of what tool you use, I would suggest using the power quill. A few days earlier, when I was milling the 1" holes, I started by trying to manually feed. You just can't get enough control that way on something as delicate as acrylic and, I would suspect, thin aluminum. If you have a uni-bit that runs up to 1 3/8" as Darkzero suggested, that would simplify the process somewhat (there's your pilot hole), but you'd need to be especially sensitive to the bit grabbing the aluminum.
Good luck. Hope this helps.
Regards,
Terry