Let's just say the characteristics of my gas block precluded pressing my ak gas block off with pennies protecting the barrel. I attempted to drill a hole in a penny, reduce its diameter, and use a steel punch. Things did not go well.

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My plan is to register the rifle as an sbr and then cut the barrel, after an extended function test with my new gas block to make sure the rifle functions. Is this marring bad enough to kaboom the rifle?

It is not going to kaboom on you, but it may not be as accurate as you like.

I keep a little brass ball knob around here that I can chuck up in the drill and use valve lapping compound when something like that happens

Accuracy is irrelevant. I just want to make sure it goes boom repeatedly before I submit sbr paperwork and chop to 12.5.

You could just take a hand reamer and clean it up a bit.
Or drill out a land around the hole.  It would look like a step very clean looks nice. I'm not sure of the
name of the bit is but flat tip reamer bit.  

There is nothing there to cause a kaboom

I think a new chamfer could be cut, without shorting the barrel.

But it would take a sharp, multi tooth 120 degree countersink, like this:


Although not the best angle for long range performance, being 30 degrees per side,
it would clean up the damage, without shortening the barrel length.

Turn it slow, with pleanty of oil on it, and it would make quick work of where the metal is peened into the bore.

The above coutersink is on eBay for $29 + a stupid high shipping cost ($15), but there are always others popping up.

Get a 3/8"" diameter "dapping punch" , essentially a ball bearing on a steel rod. Mount the punch in a hand drill. Get some valve lapping compound, dab the punch in it and go to town on the crown. It wont chatter on the crown like the countersink above will.