If I was cutting a hole in the transom I would use the 25mm flat bit. If possible either cramp a piece of timber or wedge it on both sides to where your drilling from. These flat bits are ok but are very crude and have a habit of juddering and creating an elyptical hole. On the side the bit bursts through you can save a lot of damage by using the timber block.To enlarge the hole by 1mm dia simply get a short length of brush stale cover it with a length of course emery/abrasive cloth push it in and out a quite few times. Job done
Its always easier to make the hole bigger than it is to make it smaller,seal the cut out with salt water proof silicone etc and fit your bung.