Quite a while ago, back when I was a proper cabinetmaker (which is to say poor as a church mouse but happy in my work, neither of which applies now), we had a young lady from the École Boulle working with us for a while. I thought I was pretty hot at inlay and marquetry, but she was phenomenal, and would have made short work of that WUG inlay. Looks like a three pipe problem to me, at least.
Since I'm now very pragmatic about that sort of thing, I'd be tempted to make a diamond shaped recess, fix the inlay, and infill the rest with a contrasting mastic of some sort. Although it sounds disreputable, that sort of jiggery pokery has been the stock in trade of inlayers for donkeys' years, as careful inspection of old banjo fretboards will confirm.