This is a great time to decide what type of build you will be striving towards. Perfection, Utility, or somewhere in between. Then use that to judge the advice you receive. I was amazed that someone would recommend skin replacement for this. On the flipside, others will consider it craziness not to replace the skin and start over. We are all looking for something different in our plane.
I had a similar situation, but it was on the flat surface extending over the rear wing spar (the part that the flap rides under). I was able to remove the damage, but the metal had stretched and created a wave. I didn't not know how to shrink AL, so my choices were install a new top skin or slice it to relieve it. I chose the latter and put a 3/4" slice in it and did some clean up with filler. The skin lays perfectly flat over the flap and the 3/4" slice is really not that noticeable. 200 flight hours and one year later, it really doesn't bother me. Others would be saddened each time they walk past it on every inspection.
From a strctural and safety perspective, we should always strive to meet or exceed the design parameters of our planes. But the cosemetic side is bit different. Perfection oftens comes wih a price and that price for those without experience is time. You just have to apply your goals to that trade off.
In this particular case, if you have any skill with filler, the repair will be 100% undetectable. I ended up using filler over this complete seam to hide what I thought was an unattractive seam with pop rivets. Took maybe 2 hours for both sides. I do have a decent experience with filler though.
Best of luck.
Larry