Would a reverse applique with the same fabric, even if print matching up the print pattern, work? I have used that before when I made a boo boo like that. Try doing a whole quilt and the needle busts and rips the fabric in the center into the back! Now that is fun to replace. Otherwise I would not rip all the quilting out, only where you are at and using the ladder stitch which is really nice for hiding stitches, and replace it with the same fabric and the piecing it in via hand. That is how I repair my quilts and you cannot tell at all once you quilt over them. As Emma said, quilting hides a multitude of sins. If were me, and I could get away with the small hole and doing reverse applique, that is what I would do.