Heat builds up in the tool when its not being kicked out with/in the chips and friction on the tool (flutes)
Friction on the tool is unavoidable to a certain degree, but it is controlled with RPM and feed speed which has an affect of time in the cut - less time in the cut - less heat build up. But I think the bigger factor is getting the heat in the chip, and out of the hole.
Wood is pretty forgiving - but if youre bit is hot enough to burn wood, its also hot enough to affect the heat treat on the drill to some degree. (tempering generally is done between 350 and 550 degrees - and tempering is reducing hardness)
I dont care for 118 degree points... they tend to walk a bit more than 135 degree - and for metal, there is a notable difference in starting without walking and add a split point and the cutting is much better than any 118 Ive used.
You dont say what RPM youre running at. But if youre over 300-400 RPM thats probably not helping. And you need to feed at a decent clip, you dont want small dusty chips, you want bigger chips - that will flow out the flutes - that carries a lot of heat out with the chips.
Another thing that just came to mind - if you have a 118, odds are its not a split point... The web on a 3/4" drill is substantial... and can add "rubbing" to the point of the bit, where its really not cutting. A 135 split point, I think youll find will be free-er cutting.
I would guess, based on you saying the surface finish is better, but getting really hot... that what you are seeing is that the point is not quite ground right (a very typical thing with Drill Drs - ive found you have to be pretty practiced with it to a good grind, and even then, sometimes it just doesnt work out and you have re-setup and regrind) and its actually drilling a touch undersize and the flutes are rubbing as they get down in the bore. The flutes would burnish the walls, build up heat, and could be why youre getting so much heat.
Honestly, if you want to increase surface finish quality, reduce your sanding, and have a more accurate bore, I would suggest you get a bit that is 1/64 undersized and then use a chucking reamer to bring to size. One thing... keep in mind, reamers typically run at twice the feed rate and 1/2 the RPM of a drill bit at that size. Yes it adds a step, and it adds equipment cost. But in the long run Ive found its more efficient because you spend less time sanding, and have an accurate bore for mandrel fit, and part fits.
But in the end, I would be suspicious of the grind you have on it right now. I have the 750X and it aggravates me constantly. A friend of mine has the 500x and it doesnt fit larger bits, but, it always seemed to work much better. Wish Id have gotten one of those instead or went with something less plastic and more precise. All in all, ive been pretty disappointed with the Drill Doctor I have.... to the point, I seldom, if ever use it... Not even sure where it is right now.
Maybe try a regrind - and see what happens, or try the 135 point with a split point (warning if yours is like me, adding a simple split with that thing is not possible... mine turns it in an hour long process that has to be hard on the diamond wheel.
Cheers
Wade