You have to consider that since these are man made fish, they could have genetics in them that would have them create a wen ( fleshy crown of an Oranda or lionhead, etc) because if the fish did have hole in the head, that is usually caused by poor water quality and/or vitamin deficiency, there should be no excessive skin growth that comes from the holes regenerating.
As Colin mentioned, the rate of growth is concerning, as concerning as the amount of tissue that was extruded or is growing.
Since this is an unknown tissue, it's unlikely that it is a treatable disease short of a biopsy of the tissue. The tissue could be muscle, brain, a cyst, wen tissue, etc. To be honest, keeping the fish in a 10 gallon tank is going to be a major chore to keep the water clean enough to prevent future diseases even tho the fish is eating. As mentioned, it could be more humane to euthanize this fish than keep it in the 10 gal.
On a side note, Fish are a miraculous animal. At Coral World observatory in the Virgin Islands, I once saw a Doctorfish, in a school of other Doctorfish hanging under a bridge, swimming fine, that was missing almost an entire side of flesh.( I could see bone :^0 ) One can only surmise that it's because the fish is in a fluid environment that it was able to survive in that condition. I think this is a similar thing with your Goldfish. There's no telling what long term effects this condition is going to bring on. If you intend on keeping him/her, I strongly suggest a larger aquarium, not putting any other fish in with it and keep it as clean as possible.