Speed should be zero: no spindle needed. Feed should be as fast as you can go without inducing wobbles into your grooves - this was the problem I had to fight with my machine because it just has too much flex. If you try to mitigate it by using a slow feed rate the hologram not only takes forever to make but also the grooves don't come out as smooth and shiny. There's something about pushing aluminum out of the way quickly that results in much more reflective grooves.
I fashioned hologram bits from pyramidal carbide engraving bits, by carefully rounding the point into a tiny hemisphere that I can only barely make out with a loupe. I haven't used a diamond-drag bit but I imagine it would work if it's not a super fine point and/or if you minimize the pressure/depth.
Actually getting good groove optics to form is a bit of a trial-error process that may take a few tries to figure out. Holocraft assumes a round tool and takes in a diameter to generate an optimal depth below the surface of the hologram to press into it. The actual value doesn't have to be exact, just experiment and find what works. Holocraft also varies the depth based on the assumed light altitude angle, to maximize the reflectivity of the groove for a spherical cutter. I think I might replace all this behavior with just a user-entered "cut depth" value instead.