I can tell you what I'd do if it were mine.
1) Call S&W and ask if they will fix it under warranty.
2) If not, I'd use a felt polishing wheel on my Foredom Tool at a lower speed and high polish the affected area with Flitz Polish. I have had GREAT success in making chipped or peeled Nickel look like the gun was brand new and never damaged. At this point if S&W will not repair free of charge you have nothing to loose. More than likely IF the damages was caused from hot loads and the flame cutting, the area might now be stabilized and not peel any further. By giving the chipped area a high polish there would be no more Nickel tp peel again and could be a permanent repair.
I've had incredible success making unavailable new blued screws and Thumb-latches looking like Nickel for use on Nickeled Smiths. When high polished with Flitz, almost no one would be able to tell and the high polish keeps the piece rust free even though it is really bare metal. The edges where the bare metal meets the Nickel must be "feathered in" on lower speeds. Use light pressure, check often before gong further. Works like a charm!
Feel free to PM me if you want to try this.