Alan makes a great point above about putting the hole as far lateral from from casing as possible.
My biggest problem with this is that motor mount attachment of the cord places the shock cord in the worst possible place relative to the ejection charge. If you have ever seen videos of a rocket motor in a static test stand, you know that even after ejection there is a flame (kind of like a big candle flame) that comes out the forward end of the motor casing for a few seconds, so for every launch you are not just blasting an ejection charge over the cord, you are actually "toasting" it for a few seconds. I have thought about whether it would be worth it to do a NAR paper looking at just how far this "flame" effect extends forward, and how it changes with different motors and also particularly with minimum versus non-minimum diameter rockets. Chris's idea of making it easier to swap out the cord makes a lot of sense. I have gone to just guessing that the effect goes about 4 inches forward of the front of the casing, poking my shock cord through here and extending it forward, wrapping the cord AROUND the outside of the rocket, and covering it with Mylar tape. I haven't had any burn throughs with this technique, and the tape seems to hold pretty well so I haven't had any "zipper" or structural damage for the attachment site. My rockets are sports type, often unpainted, so while it isn't cosmetically ideal (you get a ridge under the tape on the outside of the rocket where tape goes around the loop) it isn't a problem for me.
One solution may be to use a piece of heat resistant tube (maybe a small carbon fiber tube) in place of Chris's Q Tip that extends FORWARD of where you think the engine flame is going to reach.
This allows you to replace the cord if needed, but also hopefully puts the exposed area of the cord away from where the heat is going to be the worst.
anyone have ideas other than Carbon Fiber tube for this? Need something cheap, small, light, and relatively flame resistant.