Faulty logic.
It's going into a custom block i'm making for it that gets mounted to a plate, and i figure for the low holding force about 5lbs. that style would be the cheapest and easiest style to go with.
Well...
I will disagree for the simple reason that there is nothing in the DA style that is designed to hold that small. In addition, I see very little reason given above to dismiss the 8mm watchmaker collets. This is
exactly what they are made for. Heck, you could even buy the collet block stock from Levin to fit. It ain't less expensive if you can't actually find one
About $400 gets you a block and collet guaranteed to hold .0002" runout:
Type WW round bore .2000", $134 (may be more for special diameters)
LevinLathe.com: PRECISION COLLETS
WW square collet block, part #0701-03, $259
LevinLathe.com: LEVIN TOOL HOLDERS.
The other, low-cost route is the same. Sherline will cost a little over $100. No specific official tolerance is specified by the manufacturer, only "...that the collets available from Sherline are accurate yet economically priced. Should extreme accuracy beyond the tolerances of these collets be required, even more accurate collets are available from other sources and cost from about $40 to $350 or more each."
http://www.sherline.com/1160inst.htm
Type WW round bore, special, .200", part#2082 $50
Sherline Direct: 116000/117803 WW Collets
WW collet block set, part #2045 $60
Sherline Direct: 2045 - Index Block Set