That sounds like the same type of repair that I did on a 2N about two years ago. I formed and cut a cold rolled steel patch that fit as close to the out side as possible. Then V'd it out on the weld seam. Using a mig welder, I welded in small length beads about ¾".Then stopping to let the cast iron cool. Also welding one side then other side. This is commonly called cold welding. Surprisingly it turned out real good.
I really could not tell you what caused the damage. This almost sounds like day saa voo. I did this on a 2n tractor where the fellow bought it real reasonable like $400. Come to think of it, I did replace the ring gear on that flywheel because of missing teeth. That could have caused an internal failure inside the bell housing. The breakage is in an area that does not affect the structural strength of the tractor and does not have to be water tight. Good Luck.