I drilled three holes with this bit and it doesn't look noticeably different. Apparently the life of the bit can vary significantly depending on how fast you run the bit (check the recommended speed charts on the AmeriGlas site), how thick the glass is that you're drilling, how well you cool it, etc..
I've seen LFSs drill tanks with a hand drill so I know it can be done - just make sure it's variable speed so you can run it slow enough. I've never tried it myself, but if I was going to, I would probably make a guide out of a block of wood to get the bit started neatly. You could probably just use a regular wood bit (hole saw) to drill a hole just big enough to fit your diamond bit in and then maybe clamp it or double-stick tape it to the tank.
HTH