I hope all this makes sense. *Thanks for your advice.

* - Owen -

Epoxy sands out really well so you could just build up a dam using
tape and sand it all away later.

I like the concept of doing a patch using similar grained material. In
a very early job (16-17 years old) at a rustic furniture factory when
we had bad knots in Pine we would use a chisel them out and sand a
plug to fit and just yellow glue it in place. You would be amazed how
well it blends.

Another option is to just break out all the loose material and grind
and sand the edges smooth. I actually always like to have some little
hidden wild edge on any of the better furniture I build. And when it
is for me, I like it to be visible.