the obverse is normal...i dont know a thing about error coins so figured id ask people with knowledge
Welcome rookie, that would have to be post mint damage (PMD). There's no way for it to have been struck like that.
A dryer coin would have deformed rims and both sides would have unusual wear (not just one side like the OP states). My guess is someone with a sander or other device ground off portions of the reverse.
It appears to me to that a hollow round bit was used. You can see the marks from a tool. I use a diamond hollow bit to make holes in glass , tile, or crystals. They are relatively inexpensive and quite handy. But PMD for sure, Welcome to the forum! http://www.ebay.com/itm/10mm-3-8-Ce...229?pt=LH_DefaultDomain_0&hash=item4ab9c5aee5
I guess it's what you're familiar with that you makes you think what someone could have used. As a machinist my first thought was a spotfacer tool.:smile