My Living Room These Days

This is my living room right now (or at least a few days ago when I cleaned it up to put in my new rug) This rug is to replace my old one, which was the same color scheme, but a much nicer pattern, which my cats ruined by "claiming" it (other wise known as pissing all over it) in some bad behavior elicited by the birth of the baby and the move to Brooklyn. I don't love this one, but it is big (9' x 12'), the right color palate, and was $125 at Housing Works.
All and all the living room is looking not so bad, still needs a lot of things, but you know, livable. However, then we have the other side:

so when I moved in there was a piece of french moulding on this wall (there are still bits and pieces of it) It is actually all over the apartment, and I sort of like it, but this particular panel had a piece of framed drywall over a cut out, and just drove me crazy!!!
I can't find a good picture of it, but here is a before:

I have been complaining about it for months to my sister, who has obviously known me for a long time, and says constantly, "Don't touch it, I don't want to hear about you trying to pull it off!" Up until last week I heeded her advice, but one day the baby was asleep, and I decided that I could just take off the dry wall that was backing the shelf in the other room. So nice right, see through the shelf from both sides, let a little light into the interior room. I carefully cut the drywall along the inside of the frame so I wouldn't take off any more than necessary, and I started to pull it out.....however, it left an icky edge. I looked at and I thought, "if I just pop off this frame, I can just pop off the whole piece of drywall and then I'll put the frame right back in, and make a nice little finish to the living room side of the shelf." So, not wanting to destroy an old plaster wall, I gingerly tested my theory on just one side of the frame, and it was easy, so I decided to proceed.....but!!!!when I went to pull off the third side, it had been glued, rather than nailed to the old wall, and a good chunk of the wall came off to. Now I have a hole.

When my boyfriend got home, who, like my sister, has known me for a long time, he didn't scream or yell, he just said "oh, honey, what have you done?"

I obviously have to fix it, but for now I just hung a painting over it, which begs the question, why didn't I just do that to begin with?

Also, the library shelf below is a recent Craigslist purchase ($30!!!), this is not where it will permanantely go, but it is currently being used as a deterent to the baby messing with the hole.