SUCCESS!
I annealed the metal, made a divot with some diamond dremel bits, and then drilled with carbide bit and tapped with cobalt tap. Couldn't believe how easy the drill and tap went through. I almost wonder if I softened too much or if the bits just made it that easy? I wasn't that surprised at the carbide bit chewing through the steel, but the tap was also much easier than I expected, barely required any force. The threads seem solid though and the drill bit was 2.5mm.
I feel kind of dumb now. I had this turned into such a big deal in my head and it turned out to be no problem. Oh well, it's done now! Going to do a test fit and see if anything else needs to be changed. Thanks again for all the help guys!