What would happen if a hot air ballooon was punctured in mid-air?
Hot-air Balloons are already made with large holes in them. They are called vents. They can be located in the balloon’s top or sides. They tend to be much much larger than the 4-inch diameter you described in your question. But, their opening and closing are controlled by the pilots. Research the FAA Balloon Flying Handbook. It will give you much more insight than I can.