Me personally, I'd take the scales half way between the yellow and red arrows and give it a crescent shape with the high side of the crescent toward the tip of the blade. Just like the line where the original scales were. You can see the line where the scales used to be.
What you have is a Hudson Bay Roach Belly style blade.
Here's an idea of what it's supposed to look like from a historical perspective: Knives, with leather belt sheaths from The Bear Tooth Leather Company
Originally the wood was lower than the yellow area. Where you see brighter metal is the only area there was a wood slab. The rest was exposed metal.