The original pic doesn't have much to do with the rear sight. If you look close, I was referring to what appeared to be a horizontal crack and gauge in the frame right at the L curve where the top strap meets the area above the firing pin. But the crack was just a split in the accumulated gunk there. The hole is not an issue, although it may have contributed to the funny look of the gunk. It is receded into the top strap by 1mm.
Once the gunk was cleaned and the screw hole was visible it was looking good again. The second pic was moving towards resolution. That was not an area that I had focused on much when cleaning and it was looking pretty gnarly. I'm not worried about the hole... it was all the ripples in the gunk that threw me for a loop. The carbon had colored just enough to look like part of the frame.