Wow, I give you a lot of credit for trying! If it isn't possible to replace the three damaged blocks, you could also remove the entire row and end up with a smaller quilt. Any blocks that can be salvaged from the removed row could be used to cover a pillow. Or, as you originally thought, make a teddy bear. Although it's ideal to try to save a quilt, sometimes it just isn't possible and we shouldn't feel guilty when it can't be done.