My first question would be "octaganal vs hexagonal". I have never seen an eight sided die, which is not to say they don't exist. I've just never seen one. . . First off, the die must be held to the centerline of the machine, arbitrarily grinding off the corners negates this possibility. Best bet would be to find a suitable die holder. Second would be to use setscrews to hold the die steady. But this requires the holder be roughly the same size as the hex die across the points. A fancy solution would be to thread stock to fit the die, then attach the die to the stock and grind the die OD to size on the spindle. This has several down sides. First is simply modifying the die so it would never fit its' original stock again. Then the possibility of generating too much heat and destroying the metal. And just how sure are you that it is truely concentric to the work?
My personal approach is to "single point" the thread most of the way and use a die to get the finish cut. Such a process can be held with a "die stock" or even a "channel-locks". It doesn't require a die holder. I bought a tailstock die holder a while back. It's a "cute" tool, but not really useful. I'll probably end up making something(?) else from it. Right up front, even with all the adaptors that came with it, only a quarter of my tools will fit. Well, maybe a third. "They" seem to have devised the tool to fit "modern day" metric tools. I have some SAE and USS dies that go back to at least the '50s. My old man was mechanicing during the '30s. Some of his tools date from those days, and likely were bought used then. I recently found on eBay some "button" dies for odd machine screw sizes that were around 7/16 in size. Decidedly less than 1/2 inch.
But to keep things in perspective, I must admit that much(most) of my work is small. 1/4-20 and smaller is the norm for my work. 1/2-20 is huge, and seldom seen. 2-56 (0.086") is probably the most common size that I thread. I have taps and dies up to 3/4-10 but that's because they came in the set. I have yet to use one.
The only use for those "tail stock" die holders is on a lathe, and possibly a milling machine. I would say to get good at threading in a vise, and single point the lathe work to 80% and use the die for the finish size. Same as with a tap. Most work with a tap is by hand, with appropriate checking that you're running true. The skill is in the operator, not the machine. . .
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