The plug between the arrows is most likely just the epoxy plug used to fill the hole where they squirted the rat glue in.

As for putting the bore through plug in, put your shaft in to the insertion depth you like. Dry fit your plug, mark where it exits the sole, cut it off.

I think both golfsmith and golfworks sell a finishing wheel to restore the shine and lustre back to the sole of the club after you grind the rest of the plug down with either a belt sander or grinding wheel.