Hey Mike,
I make the square holes for the ebony plugs with a dedicated mortiser chisel(s) and a hammer. Please see photo #5 of post #1 (bottom left corner of picture).
Since walnut is so dark I put blue painter tape down so my tired eyes can see the pencil lines. After I carefully lay out each hole I use a small 3" square to help square/align the mortiser chisel. Then hammer the chissel in as straight as I can.
The key to nice plugs is to cut the plugs slightly larger then the holes (about a 32") and taper the side of the plugs by sanding. I do this by holding a 3" piece of 220 sandpaper with my left hand on a flat surface and stroke the plug sides using right hand in a rocking motion until taper is achieved (about 5 strokes per side). Apply glue into the mortise hole. Then gently tap the tapered plug into the hole SLIGHTLY expanding the hole as the plug goes in. I use a rubber mallet for this, go slowly holding my breath and watching to ensure it is going in square.
Hope this helps
Curt