Basically, after cutting away the fringey threads, I cut an oval of red felt bigger than the hole plus a line of white teeth and then backstitched around the circle to create a monster mouth reverse appliqué. Then I cut two white circles for eyes and embroidered an X on one and a woven spider wheel on the other.
I thought it was pretty cute and my toddler was really happy about his "scary monster" pants.
I think you could easily do some other cute reverse appliqués out of felt on torn jeans, like a sunflower on a pair of girls jeans.
I used acrylic felt and have washed(cold, delicate) and dried(low) the jeans with no noticeable damage to the monster.