Ideas on what to do with this K-line E-9 shell

I think your idea of touch-up and then weathering is a good one. As you've got other engines why not put this set away for a while. Perhaps you'll feel different later.

Scotie

That paint repair looks to be doable. If there is one thing I've learned building passenger car models is patience. You can only do one step and then you have to walk away from that car or you will cause a problem , that's why I try to build 5 at a time.  An old used tooth brush cleaned well and left to dry overnight  should scrub off any more loose paint. Then you can see how large the repair will be. I believe that the K-line paint matches pretty close to Scalecoat 2 don't use scalecoat 1 on abs or plastic.. Patience is the key. explore , plan , execute and be happy with your results. I hate everyone of the cars I have built because I know where all the flaws are. An older more wiser guy from Florida told me to be critical and I would improve. He was right. And if you wont give it a shot PRR passenger is my favorite and you could sell em to me

What a shame...  Very sorry this happened to you... Do yourself a favor, set it back, and give it a break, and look at it through fresh eyes.... in a week or so an idea may come to you and you will find a solution that will present itself.... I wouldn't sell it off for a loss, I honestly believe a careful touch up will take care of this, and when it's going down the track you wont even notice it!  

You may want to contact custom painter and forum sponsor Harry Heike and see if can correct/match the paint.

You threw the set away because of a paint issue? Did I read that right?

So much for this stuff being any sort of "model railroading". Quite a tantrum.

aterry11:  "I hate everyone of the cars I have built because I know where all the flaws are."

I'm always disappointed and having multiple projects does offer the opportunity to "walk away" when it gets intense.

For the OP, good advice re defining the scope of the existing paint problem and then decide on your course of action. 

Yes, you read it correctly. However, there wasn't really any tantrum. I was quite calm. Thank you so much for your input and have a nice day.

Wonder if a Williams shell would fit on it. If they would I'd change both shells or and a professional painted re-due the bad shell. Don

Since the defect is limited to just one panel, and Scalecoat 2 is such a close match, if it were mine I would touch it up.  (Prototype locos could have mismatched paint repairs, too). 

But if you're totally disgusted by the defect, maybe setting it aside for a while or selling it would be best.  I can certainly understand if you do not have the inclination to work on it.  I've had defects on most of my K-Line stuff, too, but not paint.