The first time I used one was when I went out to prewire a house for phones and it was sheet rocked. While my helper went into the attic to drop a wire down the wall I proceeded to cut out for the outlet in the kitchen. As I started cutting I noticed light inside the wall. This is when I noticed just how long the blade was on a keyhole saw... OOOOPPPPS :'( Live and learn. The light was from the living room. So if you do decide to use one with a long blade on it remember the wall is only four inches thick. They are usefull sometimes but be sure and pay attention to what your doing.
I decided years ago I was only going to have two types of days...
Very Good Days or just Plain Good Days. I just refuse to have bad ones!!!
Back a hundred or so years ago when I hung sheetrock for a living, a keyhole saw was one of the things carried on my toolbelt. We used it as described by "grandpa" to cut out for 'lectrical boxes and such. The narrow pointed blade was great for punching through the rock and then cutting out the holes for the boxes.
For wood, a hole is drilled through as a starter hole, and the saw is then inserted and used to cut holes surrounded by wood. Because of the narrow blade, fairly tight radii can be cut.