My drill press is a small bench mount Delta, with a 1/4hp motor, two inch
plunge depth, and a 1/2 inch chuck. My first thought is to use a Silver and
Demming (reduced shank) drill bit, 1/2" shank, 1" drill.

Others have addressed the bit, and there has been passing reference to
gearing down the drill press.

Here's how I did that for mine:
http://home.comcast.net/~glyford/js/js.htm

This old article did something similar:
http://www.projectsplans.com/downloa...rill_press.pdf

I also second the recommendation for either a vise or clamps. If not
using a vise, a block or piece of angle clamped to the table may help
keep your distance in from the edge of the 3x3 consistent, only
requiring you to slide it axially for each hole to line up your next
mark under the bit--as long as your table doesn't swing around the
column on you, such as might happen if the bit jams.

--Glenn Lyford