I wasnt sure if you have access to a lathe or not. Youd also need a jobber length 1/8 drill bit which is pretty fragile. Id stick with a 1/4.
Take a step back for a second... Run a pencil or dowl rod into the hole and touch the bolt; mark the rod with your thumbnail or a sharp pencil, and compare it to the outside of the head for depth, Thatll tell you whether or not the bolt is above or below the deck.
The thing with the 1/8 drill is that the bolt is probably broken off uneven, and youll pay hell trying to start the drill without breaking it. That, and the bolts were probably some of Henrys' chrome vanadium steel and a bit tuffer to drill. YMMV.
A 1/4" drill has a bit more meat on its side. If you can make an accurate center, remove the head and make a drill guide from a piece of plate bolted to the deck. That way you can at least see what youre doing. Make the guide on a drill press for accuracy.
As far as soaking in P oil, hang a small can with a string as a wick to drip on the stub overnite. If the bolt is on the outside perimeter, Id warm up the block with a propane torch, again, with oil dripping on it.
Id also consider replacing all the bolts due to stretching over the years. If its by the water neck, a slite gasket leak over the years can soak the threads with cruddy water where the anti seize will help to protect it. I know this all sounds long winded for a lousy broken bolt, but as we all know, it can be simple or need to have a broken drill laser burned out. KISS if at all possible! I really hate when a simple 10 minute job turns into a 2 day oddysey!
At the power plant we used an "Extractalloy" welding rod. Especially on cast iron, the rod would touch the broken bolt, and flame out. The heat would shock the bolt and she'd screw right out. This was on some big stuff too. If theres a will theres a way! ws