There are many uses for the plastic, one ounce liquor bottles, formerly used on airlines and now sold in liquor stores. While I do not partake myself, someone in my neighbourhood does, and throws the little bottles to the side of the road. We recycle them.
Step 1: Prepare the Caps.
We will assume you have washed the bottles thouroughly, and now we need to remove the paper liner in the caps. I used a small screwdriver to pry them out.
Step 2: Drilling
Drilling the holes in the caps. WEAR SAFETY GOGGLES!
I made a wooden block to drill into, and clamped it in place on my drill press, turning the caps to drill the holes in an arc.
Step 3: Finishing the Holes
I used a chamfer bit in a handle to smooth the edges of the holes. This could also be accomplished by using dental floss or a pointed file.
Step 4: C'est Fini!
Put the caps back on the bottles, and your salt and pepper shakers are done. I am stuck with Vodka bottles as the local "secret" drinker only seems to drink Vodka but there are endless possibilities.