Assuming the body is threaded. Drill and tap a short length of say 10mm dia aluminium and then put a saw cut along it.

Screw the nozzle into that and then grip in chuck or ER collet with the back end facing out. Hopefully the aluminum will clos edown enough on the thread so that the nozzle does not unscrew when drilled

Can you explain why the nozzle needs to be drilled out to 3.5mm, filament is ususlly 1.7mm dia and the nozzle you have is 2mm, so what’s the problem?

If it needed to be 3.5mm then it would have been made that way, surely?

have you tried using the new nozzle as is?

Not easy to hold by the thread to drill the rear end as the hex gets in the way, may be possible to insert it from the rear of the collet.

Depending on the design some have quite short hex sections so likely to wobble.

All perfectly reasonable solutions and to prevent the nozzle unscrewing in some of the proposals, use a left-handed drill.  If it were me, I’d put the nozzle, thread out, in my lantern chuck, but not everybody has one of those.

John

If you are going to be doing a few I would (as John suggests) use a lantern chuck. A simple single purpose one can be basic.

Bit of suitable bar. Drill & thread through to suit the nozzle thread (6mm?). Drill part way through and thread larger to give clearance for the hex. If its 7mm as usual M10 should do.

Screw the nozzle in from the wide end, and with a bit of protection on the end of the nozzle, lock it in place with a screw of some sort. Grip in chuck/collet with threaded end of the nozzle out.

I would probably put a cone in the end of the locking screw so that only the outer edge of the nozzle was in contact with the holding screw.