You're absolutely right Jim, there's no such thing as being overly cautious when it comes to acrylic. Ironically, the only crack I have so far happened when I was drilling with the 1/8" acrylic bit. I would never have even considered using a step drill if it weren't for Nate telling me he used one and it worked great.
I can say that when I bored the big holes over the wing spar bolt and pin locations (where I got a small crack using the 1/8" acrylic bit), I just went to town with a step drill like I knew what I was doing. The first bit I used had rather large "steps" and as you can imagine it grabbed suddenly at each step. I will say I must have been very lucky to not hear that cracking sound you refer to. After a bit of that I dug in my assortment of step drills for one that has very small graduations between steps and it worked great.
The majority of holes that I'm up-sizing will be using the 1/4" acrylic bit I obtained from Kitfox, and I'll be chamfering all those holes as well.