The term "auger hole" goes back at least to the 1600s. Seeing as it was used by both Shakespeare and Swift, as well as in an eighteenth century Burlesque Translation of Homer, it may very well be used euphemistically here. Otherwise, its straight meaning is a hole made by an auger, a boring device.
As far as soot rake goes, a German-English dictionary from 1770 defines die Rußscharre as "a Soot Rake, or Scraper," from Ruß, soot, and Scharre, rake.
The Every Woman's Encyclopaedia, Volume II from 1911 (metadata is incorrect; page 3627 in vol V gives the current year as 1911) describes the operation of the coal stove. In a paragraph about the soot doors, we find the following description:
Soot Doors -- These are removal doors fitting into holes in the iron plating of the stove.... Through these openings the flue-brush is pushed and worked up and down and round and round, so that all the soot falls on to the bottom part under the ovens. Then the soot-rake, supplied with the range, is pushed through the small doors under the ovens, and the soot is raked out into a dustpan or paper.
It's possible that there's nothing naughty about the saying at all and that in your grandfather's time and place, being "dragged through an auger hole and beat with a soot rake" was the equivalent of being "rode hard and put away wet" (from stabling horses after working them hard).