Hi!
That looks good, the insert you painted has the neccessary recognition sequence so it will attach to the target and insert.
Basically it would be blunt ended then, right? What if you design your insert like ... No it is not blunt ended because your top insert N base-pairs with the bottom insert N.
The cell would surely recognize this as a strand break, and thus DNA ligase would ligate it. So I guess, as long as DNA ligase comes quicker than an exonuclease, the bacterium will survive. Most probably in the major part of the cells...