Step 9: Things I would Change.
I would make sure to mount the upper and lower rollers in-line and move the rollers out board as far as I could. Keep in mind that you need to use the handles in order to turn the keg, so you wouldn't want to move the support piece so far out as to interfere with your knuckles. I feel this will cut down the frequency of the bit slipping out of the groove.
Gloves... definitely gloves. I went to a festival my daughters, and left with some angry children. It seems as though I have developed the uncanny ability to pop balloons simply by touching them. You won't believe how many slivers I have found imbedded in my hands.
I would choose a different bit, something like a threading or undercut bit. The one issue I see with this bit is wear. If you are unable to redress the bit then you may want to consider a square bit that has the ability to cut from either end. Do not use a carbon bit, they will fracture often. They work great in one direction, but because we are turning by hand any reverse the motion on the bit it will cause it to break. I only recommend using tool steel.