The Big Al works really well for this. Stood upright, the big heavy fence keeps it really well balanced, and the fence is also very thick, making it pretty accurate in the "other" axis-- the one determined by how much the square is "tipped" forward or backward. I use an 18" long wood owl bit, and normally set the edge of the Big Al 1/4" or so from the side of the bit-- a nice distance for accurate sighting. The Big Al is about 8" high stood upright, so I can drill about 10" deep before the chuck will hit. Rather than using a depth stop or stopping to measure (and maybe scratch my head a bit), I reference the layout lines of the Big Al to determine my depth.

I find this method a lot more intuitive than a bubble level (for me anyway), which requires that you level all of your timbers in 2 axes, and it gives accurate results.

Now if I could just figure out a really suave way of eliminating blowout on the underside... The wood owl minimizes it, but I still usually wind up clamping a piece of 1x. Works great, but it seems the most cumbersome part of the HOLE operation.

I give a little pull back on the bit and brace or drill through the whole bore, when the feed screw exits the back side it just pulls out. Spin the brace/drill in reverse when back back boring on the reverse side. But I still get a little over zealous once and a while, yielding a little blow out.

For through mortises I've always drilled from both sides...

For through peg holes?
I've drilled from both sides...

And I've marked my bits with depth markings (paint marker or similar - needs to be replaced often) - and when I get close - slow down and pull up - this does as Tim stated - strips out the lead and you can flip it over and use a hand brace to finish, or the power drill in reverse.