I looked into this further and did some customization to address it. It looks like handling Tooling item types as Manufactured item types for BOMs and WOs was never implemented. There are several places in the code that explicitly limit this functionality to the Manufactured type.
The places I found so far are:
1. The item screen (script in xtmfg prevents adding BOO to Tooling item type)
2. The bomitem screen (C++ code in gui client prevents automatically creating WOs for Tooling item type (disables checkbox))
3. The bomitem table in the database (has a trigger function, _bomitembeforetrigger() that enforces #2 above at the database level.
4. The database function explodewo() limits creation of WOs to Manufactured item types.
In my test database I was able to override 1 and 2 with scripts for item and bomitem.
I then modified the _bomitembeforetrigger() and explodewo() functions to deal with 3 and 4.
I tested the changes on a couple of items in my database. Everything seemed to work fine with creating the BOM, BOO and exploding the WO.
Since I haven't tested it that extensively, I don't know if this covers everything, but so far so good.