Carefully pinch the finished sides of the eyelets with a pair of pliers, the ones on my Leatherman Sidekick are the ones I used when I've needed to do this type of thing. Then once you have crushed them down small enough to pass through the holes drilled in the Kydex, you can press them out by placing the sheath in drill press, on a padded layer (can be cardboard, I used wood), and (with the power turned off!) bring the press down with a slightly under 1/4" bit on the chuck, and just use the pressure to pop the eyelets out.
The you can install new eyelets (looks like the #8-9 1/4" eyelet) by using a hand setter available from knife making supply outlets. I get mine from CKK Industries.
I showed how to do some of this in my shop thread last year:
Thank you so much. This will open up several options, both the paracord option and a leather horizontal carry option somewhat similar to post 16, using a leather wrap and Chicago screws but without the vertical loop.
I couldn't get a grip on the eyelets with any pliers I had so I carefully filed off the head of the eyelet and punched it through. Since i didn't have any eyelets or a setter I used what I had, leather and Chicago screws. Not as adaptable as the paracord method but at least it will let me use the sheath for horizontal carry on the belt that I use. May try something different later.
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