Nathan - that is a common machinist's technique and works well. I know of one guy for sure that is a prominent traditional knife repair and restoration service provider that uses that technique. And having used that method on a machinist's square, I can tell you for sure that a little tap with the right tool goes a long way!
Instead of using a regular punch, try using a machinist's "prick punch". Not as much point so there isn't as much penetration of the metal. However, this style of punch will spread out the strike zone into something much more shallow and flatter than a hole when you are finished. It will look more like a dimple than a hole, and with a prick punch the results are easier to contol.
Robert