I haven't done the technique, but there was an article about it in Fine Woodworking magazine a few issues ago, so I'm basically an expert.
Your description is correct (except you may want to go more like 1/32 instead of 1/16 offset). Also, there was no discussion of reshaping the size of the drilled hole. Instead, the article suggested that the pin be squarish and that one taper the pin slightly (without making the whole pin into a cylinder). This way, as you pound the pin, the pin top will eventually look like a squarish pin on the surface. The surface of the breadboard will conform to this shape. I don't see why you couldn't do a stopped draw bore. However, you would just have to be mindful of how much pin you would need until it feels snug (so you don't bottom out).
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