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Would it not be easier to cut the wire after you have formed it? Then you'll have more of a 'handle' to help with the tight bends? If you can keep the jig accurate enough you could just lay the hooks on top of each other as you make them too, and just remove the pins after you've made five or six.
Lowe's is a store. I think the insulated wire is good as there is less risk of marking anything you hang up, but I would think bare wire would be fine for small hand tools.
Have to agree with Nihars2, this is inefficient, but if you're going to make something out of what you have, what are you going to do?. I've never seen a bike with a dynamo mount either, the dynamo usually comes with it's own bracket to mount on the frame so it can be positioned correctly to run against the sidewall of the tyre. That said, who wants to add to the work they do when they're cycling? I'm off to work on some sort of energy recovery system that kicks in when you freewheel. :)