Clean your bottles thoroughly of residue from labels.
Wrap the yarn three or four times around the bottle where you want the break of to be. Knot and cut the yarn. If your glass is pretty thick, you'll want to double up the yarn. (Beer bottles are the easiest to break, while wine and liquor bottles take a bit more juice.)
Take the yarn off the bottle, keeping the loops intact. Saturate it in the nail polish remover. I put some in a little bowl and dipped the yarn in it.
Put the yarn back around the bottle. Arrange it so the edges are straight (especially the top layer of yarn,) unless, of course, you want it angled, which is cool. Try not to manhandle it too much, though. You want to keep the acetone in the yarn, not dripping down the bottle.
Fill a your sink with water. You want the water as cold as possible — I even added some ice.
Over the sink, light the yarn on fire. Rotate the bottle continuously until the flame extinguishes itself — about 60 seconds. This sounds crazy, but the fire really does stay contained to the yarn, and this is a safe inside project. Wash your hands after handling the saturated yarn and lighting it on fire, though, and for god's sake: Use good judgment!
When the flames extinguish, plunge the bottle immediately into the water. It should crack on its own, but a small tap with the back of a spoon could help a stubborn bottle along. Sometimes, they won't break at all, and don't force it. You'll just have to try again, and double up on the yarn. It probably didn't break because the glass was thicker than you thought. Remember, please: It's not perfect. Sometimes it will work, sometimes it won't. Sometimes your edges will crack, sometimes it will break clean. It's science, but it's not exact. Experiment with it.
Thoroughly sand the edges of the bottle, inside and out with sandpaper. If sanded correctly, these former bottles would be safe enough to drink from.