I also use PVC, and this is what works for me.
I went to a local wood working store, and found a Dremel bit that wood carvers use. It looks like a cylinder, covered in hard bristles.
I ground off the bristles on the very end, and kind of rounded over the tip bristles, because, otherwise, the bit tends to dig a deeper hole than I want.
I'm sorry, but I don't know the actual name of the dremel bit, but it's used by wood carvers. The advantage to using it, instead of a drill bit, to widen the slots, is that it doesn't tend to grab and drift like a drill bit. You still have to be careful, but it's much more "controlable".
I drill a 1/4" hole, centered where I want the slot to go, and then use the dremel and bit to make the slot wider, by gently leaning the bit toward each side.
I am not that concerned about too perfect a slot, or too tight a slot. I use D2T to coat the slots and joint faces after I've painted the lures, but before I do the final assembly and epoxy top coat, so I want enough play in the slot to allow for the buildup of epoxy when I coat it.