Bummer, certainly not something I would expect to happen in a 2003 Lexus.
There are leather/vinyl repair comanies that can probably fix this and you will not even be able to tell the differance. When I was in the car business the dealers would hire these companies to restore leather seats, center consoles etc. before putting the cars up for sale. The work these guys did was incredible. So before dolling out $1100 call your local dealer and or full service car detailer for recommendations. As an example here's a link to a company that offers the service.
http://www.werepairleather.com/