You want at least a two-speed Dremel (about 10k and 30k) - the variable speed is best but also costs the most. Of course you could always buy or make an AC motor controller to make any of the AC dremels variable speed. I like the carbide cutter bits (Dremel 9000 series - around $8. each at WalMart) for working case metal, others like the cutting wheels. Just a matter of preference. May be easiest to use a hole saw to cut the hole but one to cut holes for 120mm fans isn't cheap - not to mention needing a pretty sturdy drill to turn it. But hole saws do make a nearly perfect cut that requires minimal touch-up.
. The Dremel site will give recommended speed for the various bits and also tips for different materials. I like to use primer paint (from Rustoleum et al.) to coat the cut on steel cases to prevent rust (you could also use a protective oil like gun oil on the cut edge, but that has to be renewed occasionally and can creep if you use the wrong stuff) and once the primer is dry (heat lamp speeds drying) I use endless grommet to trim the hole if necessary. There are lots of grilles, filters, etc. out there that pretty much hide the cut edge.
.bh.
