I haven't tried the add water trick, but I think it would probably work. And if it isn't an auger that is rented this would allow the time needed to add water and come back later to continue.
As for the hundreds of posts, I haven't drawn up a map yet, but I'm going to fence the entire 48 acres and then divide them into several paddocks. I'll be using a lot of T posts also. I was planning on putting a heavy wood post every 50-75 feet or so in straight runs to keep it from leaning. I've seen old t post fences completely bent over and nearly touching the ground at the top. Granted those fences had years of neglect, but reason enough to encourage me to kick it up a notch.
I guess I'll keep reading about the hydraulic piece of this idea. If I get really attached to the idea the only thing holding it back is flowrate. I know this type of auger works well if you have the flowrate to spin it. Glancing at the specs of a couple of these mini skid steers they have 25-35HP engines and have hydraulic flows of 11.5 -14 GPM @ 2600PSI. I don't think this puts it out of reach for a compact tractor, but may encourage that unless the unit was intended to have surpluss flow rate it would likely need a bigger pump installed.