Here is a picture of our cracker, the slits were made very simply by using a jigsaw, it only took about 5mins to cut all of these holes (ensure you are using a metal blade though)
As you can see, it goes cap-pipe-reducer, no need for anything else. I think the size for each part is 3/4", with the reducer being 3/4"-1/2" ? Correct me if I am wrong. The parts I used were not from the place you got yours from, drinky_mcbeer, as I found they were not as suitable as where I got mine from.
The insulation is an old bike grip, placed in boiling hot water to become stretchier, then stretched over the cracker. Just a note on cutting bike grips, place them in the freezer first so they are more solid, then use a hacksaw.