I'm in the middle of this myself. First, I don't recommend drilling out any rivets unless you find that you need to. I removed my old latch without removing any rivets, though I have driilled out the rivets in the inner skin because I am going a different route.
If you do end up drilling out rivets, they are 1/8" pop rivets. They just hold the inner skin to the door frame, but they also can help the door hold its shape, so best not to futz with them if you can avoid it. You can drill them out with a #30 machinist's bit, or a 1/8" drill bit which is almost as good. The one key to success for this operation is to put a bunch of tape or a stop on the bit to ensure that you don't screw up and drill all the way through the front skin of the door To replace them, you will need a $5 pop rivet tool and a dozen or so pop rivets 1/8" x 1/4" or so in length.
Again, you should try removing your old latch first before drilling any rivets. There are four screws on the inside of the door, one below the latch, and a set screw in the handle on the inside. After that, the latch assembly slides away from the jamb, and pops straight out of the front side of the door.