Thanks for the suggestions. I agree the hole should be about 0.05" larger diameter than the insert.
For epxoy, the Redhead G5 is still my second choice just because the literature on it seems to only consider concrete as the base material. Loctite mentions concrete, stone, brick, and cinderblock. I also like that the bond strength is specified (1900 psi which is high). I think the hole roughness of granite is smoother than concrete and the high bond strength of the loctite will keep the insert from pulling out. The bond strengh of the Redhead G5 could be just as high or higher, but i didn't see it in the literature.
I've updated my website log with my attempts at using masonry bits to drill holes in granite. http://mackey-machining-rocketry.com/CNC%20Lathe.html