Alright, I don't want to send anyone into purse surgery with the wrong tools, so this is a pic of the tool I am talking about. It's actually just called a hole punch, but sometimes you can get them in a kit with eyelet setters and they come with several different head sizes.
All you do is find the right sized head, place it on the tassel where you want the hole to be, then tap the top of the tool a couple of times with a hammer. Since you are cutting through leather, you have to tap it pretty hard. Also, I recommend doing this on top of a cutting mat or other surface that you don't want to imprint with a little circle.
http://www.save-on-crafts.com/memato.html