I've made a couple or so osage bows with the same thing. No sweat. (If it were running almost right "across" the limb, you'd have cause for concern.) Like Matt said, continue tillering by working the angled facets to make the finished belly as round as possible. A rounder belly will be deeper, so it will bear the stress farther from the knot on good wood. Round the back edges nicely, too, to keep a splinter from popping like John said. Use a knife to scrape the scaly part away. After tillering and block sanding with grit 80, you'll probably see very little of it left.