@ Saltiest: 'will leave a mark on the gel coat' - noted
@Yara: Sorry for the confusion; I haven't done this. This is a pic of a hole someone else drilled on their boat.
'seriously weaken the rail' - what do you mean by this? Do you mean that as the boat flexes it will snap?
'better off grinding a groove in the vertical holes, but keep a large radius' - yeah, that's one option I thought of.
'Most boats have some slope on the decks to drain along the side deck.' Maybe, but on mine it don't work like that.
However, I'm interested in LooseChange's option which I'd also considered because it would be most effective. I'm thinking if it were between bolts like this, not too near a stanchion, and I didn't load the adjacent holes I could remove a section. Would it matter? Is it necessary to have a toe rail running continuously along the deck edge? Any other opinions on this?