Helical grinding is crucial for manufacturing small holes in hard-to-machine composite ceramics. This study introduces a geometric model of undeformed chips to analyze the cutting characteristics of abrasive grains on both the bottom and side edges of the tool. It reveals for the first time that the distribution of cutting grains—pure bottom-edge, pure side-edge, and mixed-edge—is influenced by the tool diameter and eccentricity. A novel calculation method for the distribution range (Dp) of pure bottom-edge grains is proposed, demonstrating that using a tool diameter at or below two-thirds of the target hole diameter effectively eliminates pure bottom-edge grains, improving chip evacuation, reducing chip adhesion, and optimizing cutting performance. Experimental validation on small holes in SiCp/Al composites (65% volume fraction) confirmed these findings and provides practical guidance for optimizing cutting parameters and tool design.