I cut slots in the tube, but I usually don't shape the tabs to fit very far past the end of the slots into the tube. Probably about 1/8" if I do it at all.

I want to build a rack for my Salsa mukluk. I haven't really gotten past the need to hook it in via the dropout pivot bolt. I always felt they could have spared just the tiniest extra expense to add a rack eyelet on those dropouts. I was going to turn down a piece of stainless for that mount, it has to clear a hooded structure on the frame. I probably makes more sense to use a separate spacer, now that I think about it a little more.

For the style of rack that Andy is building, I do the dropout attachment the same way. I add a fender eyelet on the tab, because I always thought that was one of Tubus' best ideas. I use 1/8" steel for my tabs. I have a 1 1/4" wide bar for the dropout on rear racks, and a 1/2" wide bar for everything else.