Haven't tried the felt idea. I just use flour paste. Takes some getting used to for the consistency, but practice makes ..., as they say. I do recall someone going to the trouble of cutting/grinding off the handle on the lid and running a bolt through the whole assembly with wing nuts to secure the top. I wasn't willing to put that much work into it.
My advice - no more than 3 holes, 3/32" is what I went with. As MacKenzie said, more is NOT better here. Too many folks have drilled either too many or too large holes and wondered why it doesn't work. The goal here is to just let in enough oxygen to smolder the wood, not let it actually burn. It's exactly like making charcoal - in fact, when you open up the pot afterwards, you will be rewarded with pieces of charcoal that you can just toss into the basket for the next cook.