We have done similar applications using wire edm and jig grinding.
Both materials can be processed in either fashion without much difference in cost.
In our application, we would counterbore the hole to reduce the effective length of the critical dimension for jig grind. The jig grinding process gets very difficult when this size hole is longer than 3 diameters. If you need the full length, I would recommend wire edm using a recent top of the line model.
Regarding size tolerance, your ±.00005 inch can be achieved with either process given some type of in-process sizing feedback. We use gage pins in .0001" increments in-process for offset adjustments (with high end CMM for off-line final inspection). Watch out for issues with form and orientation controls such as roundness, cylindricity and perpendicularity.
Regarding position tolerance, much will depend on the quality of the datum you are measuring from. If possible create the datum and feature in the same operation. Even when we do this our true position (ANSI Y14.5) results are near .0002", but occasionally we are less than .0001".
Measurement uncertainty of this tyype of hole will be quite large. A CMM will not be able to scan the entire hole depth, so you will have to use a partial scan or resort to vision and backlighting.
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