Step 1: Materials
Drill and drill bit
Low grit sand paper (80 is good)
This is very easy and can be done in about an hour.
Step 2: Shaping
2. On one end of the stick, carve the stick into a point.
3. Sand your pencil so that it is nice and smooth.
Step 3: The Lead
2. Using a bit bigger then the lead, drill a hole in the pointed end of your stick.
3. Super glue the lead in and using your knife, shape it so the lead doesn't squeak.
Step 4: Extra Things
You can basically do whatever you want with the pencil.