I would just get some ripstop nylon and the iron-on making stuff (I checked and the stuff I have is "Trans-Bond", I have another brand that's "Heat n' Bond: iron-on adhesive" but that has seemed a little less strong) and make 2 giant patches (since it looks like he went all the way through in some places?) that are the correct size, plus 2 inches on all sides.
Then, iron on the inside one first (turn the blanket inside out, and make sure to have the iron on overlap all the holes by that extra 2 inches, etc), having the iron on each spot for about 30 seconds, then, turn it right-side out again, rearrange the batting so that it's in the correct spots and iron on the outside one.
When you do this, be sure to make the two patches line up somewhat so that when you sew, they'll both be sewn at the same time (less work!
Then, I'd use the sewing machine and do a zigzag stitch all the way around the outside edge of the outside patch.
And then, if you're feeling really good about what you've done, you could stitch it again about 1 inch in from your first stitching to make it a little stronger, but that's not super necessary.
Also, if you do the iron-on stuff, you don't exactly have to sew it, but I've found that when it's not sewn, it can start looking a little ratty rather quickly and sometimes the edges come up and such. So, if you've run out of time, or something, don't sew, but if you have the time, I'd really recommend sewing it.
Gah! I really want to just jump through the computer and fix it for you, I totally have a plan of action right now.