Assuming these are holes going through the rails of the chair from top to
bottom, and the cane
is fed through them as it makes a vertical 180 degree bend, I'd think you'd
have to use a tiny saw to enlarge the broken out area of the hole and get a
clean edge.
I'd want to make the cuts so as to create a V shaped slot with the small end
of the v towards the inside of the chair.  Then you'd find wood that is a
match for hardness and grain, and cut 
little V shaped blocks that would fit in the holes.  You could make them a
bit large on the wide end of the v that will end up inside the hole.
Then arrange to hold them in the V shaped slots maybe using some of those
pegs we've been talking about while the glue dries.

then you could gently reshape the holes with a round file.
I think, if my image is correct, the new blocks would be covered by the
cane, so color matching might not be important, but it might be an idea to
put some kind of wood sealer on the new wood to reduce expansion due to
absorbtion of moisture.

I'd also assume you'd have to charge more to fix broken holes than your
$1.25, since doing the little blocks and making the slots to fit would take
some time.

Just some more speculative off the hat thinking from ignorance.

When i was at the Cal school for the blind, they were opposed to all those
stereotyped occupations for us, thus they taught us almost nothing of any
use at all!

tom Fowle

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