A shot of the pegging awl. There are a few things to note - a pegging awl haft does not have a large groove in it to wrap your stitching thread around as you sew. It is intended to be pounded on with a hammer, which is why the top is flat, and is often reinforced.

A close up of the awl tip. Note that it has a square cross section, and that there is a piece of leather on the awl - that is intended to be your guideline for how deep you want to pound the awl. Too deep, and you make a whole through your insole, but too shallow, and you end up smashing your pegs to bits. More on that later. Also be aware that the cross section of your awl should be slightly larger than the pegs you are cutting, as the hole tends to close up a bit after you remove the awl (more on that later as well).

Ok, so you have the awl - what about pegs? Well, you'll need to pull out some decent hardwood. I had some oak lying around, so I decided to use that. This piece is 1/4" thick, and you can see that I'm cutting a bit of it off with an awl, just a tad thicker than a short matchstick, but about the same thickness as those extra-long fireplace matches. As you can see, the cutting goes with the grain of the wood.

Since this wood was 1/4" thick, and is simply too thick for pegs, I've had to trim it down through the thickness.

Now you need to trim the pegs to length. Ideally, they should be as close to the length that you need them to be, and I cut mine with a flat end on one side and an angled end on the other - it helps to get it into the pegging hole that way. You might want to have a board or something to weigh down the ends of the piece you're cutting pegs off of, as the pegs tend to fly about if not locked down.

Make sure that your outsole leather is nice and wet (at least on the outside) and pound your pegging awl in to the desired depth. You will note that, as an example, I have made these pegs longer than they actually should be. There is a tool to actually trim off the edges of pegs (both on the inside and outside) but as I don't have it, I'm relying on careful cutting of the pegs themselves. See a finished, pegged hole on the right, as we step through the process on the left.

Wiggle the awl forward and back, and then side to side, and repeat until it's easy to pull the awl out. You don't want to just yank it out because the leather will close up a bit, and this is the same reason that your awl should be a bit bigger than the size of your pegs.

Place the peg in the hole, and GENTLY tap it in. There should be some friction between the peg and the hole, but not so much that you have to smash the peg down - once it's in, it is not coming back out.

Now it's time for the real thing! Get your shoe out, make sure it is secure, either on a stand or in your lap, and put those pegs in. You can see here that although the soles of the shoe were already dry, by wetting the outsides a bit and letting the moisture take, I was still able to peg the heel lift without any difficulty. I've left one pegging hole open for your reference. Also, examine the 2nd peg from the left - here, the peg was jut a bit too large, and the oak shattered as I tried to drive the peg in. In this case, it was nearly all the way in anyway, so I did my best to trim off the excess with a sharp knife. Lastly, I recommend doing one peg at a time, so you don't have to worry about the holes closing up on you.