Transon Repair Progress

[joe7670]

So it didn't rain today so I started the transom work based on the countless hours of reading and youtube. As usuall I have questions.

Got the bold plugs pretty much done. Patched the inside first, let dry.
Preped wood plugs and inserted them and glassed on the outside.

Found a little bit of rot on the bottom seadrive hole as shown in pictures. My though is to cut with a sawsall straight down to see if in an inch or two the rot stopps. Bottom hole is only slightly rotted on the bottom side and it doesn't seem that bad. Top hole is solid all around.

Is my thought of cutting down some the prefered process or should I be scooping the wood out and filling in with something?