Two options as I see it: if you have a dremel-type tool, use a rasp bit on one half of the hole, with the wires taped on the opposite side, then reverse the process for the other half.

Buy a wood rasp file and do it by hand the same way--you have more control than a high-speed electric tool.

How big and deep is the hole?
How far does the cylinder protrude?

I would do this job only by hand. Damaging the wires would be just as bad as losing them in the wall. If you need to enlarge the entire depth of the hole, you could use a round rasp, which usually run about 1/4 inch in diameter. If the hole is big enough, a curved rasp would do the trick and, as suggested, carefully work on one side of the hole at a time.

If the cylinder only sticks out a little bit and you do not have to enlarge the entire depth of the hole, use a sharp gouge of the appropriate curve to enlarge the hole only as deep as you need. In a pinch, a 1/8-inch straight chisel would work but would give you a more ragged hole.

Job for a nice sharp carving gouge; you will work only one side of the hole at a time, allowing the wires to be safely held away from the cutting.
Casey

These are all excellent ideas and play into my favorite thing: wood repair. THANKS - and I get to go to the store and buy a new toy to use (ok, I really like the idea of the gouge - I dont have any and this is an excellent opportunity to treat myself.)

Thanks again, guys. Tonight I fixed the hole, installed the bell and wrote a post on my blog about how it all went (with photos)

I ended up using a 1/4 flat chisel to enlarge the hole - it worked just fine.

Check it out: http://thejoshuashivelyhouse.blogspot.com/2012/10/the-ding-dong-hole.html

Here is a link that might be useful: Joshua Shively House