Can you make your goof a design element? I would cut a nice circle around the applique and applique the circle unto a different coloured background square. OR You could machine sew the circle unto a new background square and stitch down a piece of trim over the stitching line. If a circle won't work try a different shape like an oval or diamond shape. Do a couple of the other blocks the same way and people will think you wanted to do it that way.