me i would weld it up, but I own a weld shop,,a lot would depend where and how easy it is to get too,,,, if you can get to the back side/inside would probably be best to put a patch/ backup on the insyde then weld it from the outside, a 1/2'' hole is not that easy to just fill up with weld besides it will look a lot better from the inside and it well be able to be ground flat on the outside and still have the strength to hold up,,,If you were to bring it to our shop it might be able to get done for $50 of less if it was all cleaned up ready to weld inside and out....
getting the boat for 500 sounds like a good deal and boat looks like its worth doing it right the 1st time,,,,,start putting glue on it going to make it real hard and expensive to go back and have it welded
boat looks like it may be a older g3, back in the day g3 was using treated wood for the transom and the had problems with the transom being eaten up from the treated wood,,,, take a good look and make sure its not looking like swiss cheese/any corrosion