5/64 is the standard tap drill size for a 2-56 roll form tap. I took the number right off of the chart. Going smaller might be necessary to get a 3B thread, but will probably break taps. Yes the hole does get smaller because of forming the thread. Thread forming usually works in soft gummy material like many stainless alloys. I have tapped 2/56 in titanium with a roll tap. However you may be right if the Ti is hard and the hole is deep, there could be problems. Generally we go a couple of thousandths over when tapping in Ti but the guest may not be able to get away with that trying to get a class 3 thread.
I consulted the speeds chart supplied by Tapmatic and they recommend 32-45sfm for unalloyed Ti at 14RC. 25-40sfm for alloyed at 26RC, and 12-15sfm for alloyed at up to 36RC. That calculates out to 533RPM at the slowest and 1998RPM at the fastest. I mentioned 1000 RPM because that is the fastest recommended speed for a Tapmatic tapping head. I use a TC-DC model Tapmatic for small blind holes because it has a fine depth adjustment. I know what you mean about the groove in the tap, but I don't know if you can get that groove in a tap as small as a #2. Titanium does work harden instantly and that is the issue most likely to be a problem depending on how hard it is to start with.
In 1984 I ran a production job of 40,000 cast aluminum housings. Each one had 60 2-56 and 4-40 blind holes. That comes to 2,400,000 holes. We tapped them in CNC knee mills using four 30 TC-DC tapping heads and Balax form taps. Had to rebuild the tapping heads several times each during the run of the job, but they worked great. It took less than 3 seconds per hole.
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