Need Help. Hole in Vintage Quilt

I need help trying to repair a hole in a quilt. It is a worn cotton
quilt that I think is from the 30's and it has a hole chewed in the
middle of it by an adopted dog. It is a simple applique block sashed
with a faded Sandra Dee pink solid. The background was white muslin
with a 30's print butterfly. I think I can save most of the butterfly
but what to do about the rest.

Should I make a new block and replace the old one? And what to do
about the cotton batting? It has worn to a woof and migrated into
nubbies. And I know I can do something about the color but what to do
about the quality of the fabric. It is wonderfully soft with age.

Help? Ideas? Suggestions?

The quilt belongs to a wonderful woman who cuts our hair. She even
puts up with my two wiggly worm boys. She loves this quilt and was
devastated by the damage.

Ginny