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The pictures help.
There are 2 kinds of corner bead that are used. Metal nail in and paper and metal compounded corner bead...used mostly in steel stud construction where you can't obviously nail in the other kind.
If the compound in type isn't done really well, then it can bubble out, and it looks to me like that is the kind that is used.
Usually, the first application of drywall compound is a setting type, where its activated by water instead of air. It dries harder and stays more secure, but it doesn't sand well. I would recommend that if you are doing this properly to use the same type of product. That will fill a slightly deeper crevice. Then follow up with how ever many applications of regular compound you need. You don't want to go too heavy with regular joint compound as it will crack as it dries.
So set your new corner bead with setting type compound, and finish with regular. You 'can' get away with replacing a section of it, but I would replace the whole corner. Trying to get the metal to all line up in multiple pieces is tough. Especially with it already on the wall.
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