When milling octagonal pegs is it best size them as as an octagon circumscribing a radius equal to the hole size? Or do you "step down" a bit?
These would be hardwood pegs in softwood members.

I've read: "...the distance across the flats of the octogon should be slightly less (1/32") than the peg hole diameter and the distance across the corners of the octagon should be slightly greater than the hole diameter." This was assuming cutting green hardwood pegs.

John,

Are you drawboring?

My brother-in-law made all of my pegs for me by ripping them on a table saw - into octagonal shapes. From the 1-1/8" boards I gave him, he could make over 500 16" long pegs in a day (easy). Flat-to-flat was less than an inch, and corner to corner was slightly more than an inch. (As Mark Anthony suggests above). As long as the pegs meet this basic criteria, your tolerances (dia. of the pegs) can be a little sloppy. Not all were perfect octagons either. With that said, some drove harder than others (hardwood into hardwood). We sorted the pegs by size and took more than a few of his bigger pegs to the belt sander (the ones that were nearly an inch, flat to flat). Black locust pegs were, by far, much better than white oak pegs. (rarely split when driving). Walnut pegs weren't worth a crap. No doubt, these pegs fit very tightly - if you drove one completely through the beam, the cross section of the peg emerging (extruding!?) from the other side of the beam would be more like a circle than an octagon.

I have no experience driving them into softwood, but I imagine they would work great. Ours were sometimes a pain-in-the-butt because they were hard to drive into the hardwood. Rounding both ends of the pegs helps. The leading end of the peg should be rounded for obvious reasons (or tapered for drawboring), but one of the guys helping me (who had never worked on a timber frame in his life) discovered that it also helps to round the end that you're hitting with the persuader - the pegs (ours hard dried) tend to split less frequently (but it's rough on your persuader!).

Pegs were cut from maple (what I had)to 1"+ on the table saw and sized in the planer to 31/32" flat to flat. I cut tapers on the end with a quick jig in the chop saw. It was a small frame and I don't know that I would do the tapers in the same way for 500 but the taper is faceted like the peg and looks pretty damn cool, may leave it.
The frame was assembled with draw bores(except for a brain cramp on one brace)One lesson learned is to be conservative in the drawboring in softwood, a little blowout on one joint.
It worked great and I really like the look of the octagonal pegs.

Thank you gents

I use the octagon pegs all the time now... I use table saw and then a router table w/champfer bit and I find that the pegs don't have to be perfect octagons to work, but they do need to feel right when driven into the hole... this is an efficient way to make pegs, but watch out for bad grain, pegs should always have straight grain.
there was a thread a while back where someone suggested starting with square stock at .95% of hole size...