You’re good. That’s only a VERY secondary recoil surface, the primary being behind that giant lug in the front. IF you have NOT already done so, do make sure you have contact up there though.
To fix that chip in the back, there are a lot of ways to go about it. I would personally strip that area, white the hell out of it (but VERY carefully to keep it localized on JUST the chip), then gently rough it up, and finally clean off all the dust, etc. with acetone swabs. I’d use a good UV-safe clear, waterproof structural epoxy like T-88 to fill that area up to, and a little proud of the surrounding walnut, making sure to squish it into the grain, and get a good bond.
Right NOW is when you carefully re-fit the tang into that epoxy block, NOT LATER. Let the T88 set up for 2-3 days or a week, then, if you’re good with one, a rotary grinder, or preferably a mill, can re-inlett that area for your action.
THEN, it’s all hand work to gradually (not rougher than 320) contour it all to match, and polish yhr epoxy to the same shine as the wood. Make your final few minutes with paper in GENTLE fingertip circles on that glass.. probably 400-600 grit.
Then oil it all to return the walnut to what it looked like all around your work.