I used plastic gallon milk jugs for makeshift dig boxes earlier. I haven't lately, but I have an abundance of cardboard boxes waiting to be cycled into the cage, so I'm not in a hurry to go back to milk jugs.
One issue I had was that the cut was jagged in a couple of places. Not too long after putting that in there, I saw a scab on my rat's back. There was the possibility that this was from one of her sisters, but they don't normally draw blood. We concluded that she may have gouged herself going into the jug.
The next jug we put in there, we cut the hole and then applied a lighter to the edges to smooth it out. It seemed to have worked pretty well. So I'd just warn about making a really smooth cut. Use flame to ensure you don't leave any snags behind.