How's your flow in the tank? In my experience,when toadstools usually get holes in their crowns, it usually results from a build up of too much sediment that settles in one place.This starts to block the light and eventually cause damage by burning the coral. Try re-positioning the flow in your tank so that the polyps of the leather coral are flowing within the current,this can help keep the sediment in the water column and help prevent it from settling and causing more damage.As these corals grow larger, it becomes more important to increase the flow as well. I have had this happen to me with 12" green polyped toadstool that I grew from a 2" frag. I do agree with The lugols dip as it will help to prevent the spread of the recession, but if you don't re-position the low, the recession will likely continue. Don't worry about the hole because if you keep up with your water quality after the flow issue is settled, it will heal in time. If it does not heal, then you could easily just frag the coral by cutting off a healthy area of the crown, and attaching it to a frag plug with fishing line.Good Luck and don't give up!