Yeah...

So it pealed the gel off and exposes the glass..

Some epoxy and paint? Marime tex? Grind it out and glass it?

I'm not a glass guy. I can glass, I can make it strong and look good. I have no idea how to judge the damage and proper fix though.

I'd inspect it thoroughly for any pulling or delamination from the inner wood. I'd it's still solid, grind it, glass or just resin if needed & reshoot the transom. Not a huge undertaking. Just my thoughts on it.

it hasn't pulled away from the inner structure at all.

That's what I was thinking but not sure.

As I always like to paraphrase Brownie .. The 'other' invention of the devil.

I have in the past course ground it down relatively smooth and made a gelcoat paste and screeded across with a wide blade, sanded it smooth, final coated with gelcoat. Blended, buffed and away you go.

With 5200, bet it didn't leak!

Still did. Lol

The transom assembly was so badly corroded it didn't stand a chance. Why go through all the work and not do it right...

Sorry to hear! I had a boat I needed to replace some plastic thru-hull fittings, but someone put them in with 5200! You of all people can guess how that turned out! LOL!

Yeah that's always fun.

I usually carefully use a chisel or such and a hammer to break them apart and bring them out in pieces. Got to be careful though.

So I ground down, it's gonna need some glass.

Shame you had to go through that.
I've done 3 boat restos , two of which would have been rated 'massive' and the only time I used 5200 was when re-inserting the new transom drain tube . And even then the hole was completely epoxied and 100% watertight before the new tube went in .
The other invention of the devil .

Looks good though! Leak and tearoff off of drive didn't seem to do too much damage! Still a pisser to have to go through all that though! Keep us posted!