What if you increased the seam alliance on the seam where the indented edge comes together? You could measure the "extra" & divide it by 8 (the number of indented points) & maybe subtract a smudge from the size you need to increase.It might even need to be graduated from the outside to the center (like a dart) since it appears that there might be more excess on the outside edge than in the center. I would also be gentle because of the bias edges, and don't uuse short stitches or it might pucker. Good luck & let us know what happens!

Did you ever figure it out?
 

I also inherited a lone star (star only) from my grandma. It has about a 2” hump just like your picture and won’t lay flat. I’ve tried everything I can think of. I’m deflated. Did you ever figure out yours and how to get it to flatten? 😢

Don't fret. All of us have done some regrettable things with fabric and learned the hard way. Somehow it seems a lot is on something we wish it hadn't happened such as a project from the previous generation.
I wonder if that will be flat when you put the rest of it together. There are so many bias edges in a Lone Star that it may simply be that causing your issues. You can work a lot of that in with some determination and patience. Most quilters are well acquainted with the "fudge factor".

Jamie Wallen has a YouTube video where he uses spray starch to flatten wavy borders. It might help with your quilt:
https://www.youtube.com/watch?v=FkVdQZqPJEw

It may not be possible. This is a typical issue with lone stars, many times if they're not cut or assembled perfect, they get a hump in the middle. This is nothing against your grandma; is more a commentary on the difficulty and finicky-ness of the pattern itself. Is your quilt already quilted, or is it just a top?