Yes indeed, a Dremmel to grind off the heads isn't the fastest method!. It does provide the control so that you can get a clean removal which is more difficult with a grinder. But it will do for minor fixups and odd jobs.
If you plan on doing a lot of rivet work then you do indeed need to get the right tools. One of them is a device to automatically center the drill bit to drill out the rivet such as discussed in the thread
http://www.airforums.com/forum...tool-9586.html
the link to
www.aircraft-tool.com is no longer valid but the site still has rivet removal tools for $45 or so.
I'd also suggest a pneumatic riveter. Harbor Freight seems to be a good source for these and it appears they have two quality levels. $50 or so. That also means a decent compressor for tools.
Then you should also get a rivet shaver.
www.vintagetrailersupply.com seems to be the best source for these. They also have a good price on the 5/32 bulb tight olympic rivets as well.
Then some clecos and the pliers would be useful. You can also find these at aircraft-tool.com These are temporary rivets that help you get things held in place and configured properly before you commit the rivets.
Then don't forget the sealants and all the other good stuff it takes to make sure the job gets done right!