What ever ate the bark away from the side of the trunk, be it a wabbit or vole, damaged the top of the tree. If you cut through the layer directly below the bark (the cambrium) you cut the flow of sap and nutrients. If you do this all the way around the trunk it will wind up killing the tree. Sometimes if even just a little area is left it is enough to sustain the life of part of the tree though. It appears as if the critter took out the area for the top of the tree.
You can prune back the dead and try to allow the tree to live, but I doubt it will last much longer because the dead area actually goes from the branches all the way down to the wound at the bottom. I have seen some trees live after such a attack, but more often then not they do die after a few seasons. This is a very common injury due to the fact that folks with string trimmers don't realize that the bark is weaker then the trimming line.
The best thing that you can do for it would be to make sure it is well fertilized and watered and don't let the tree get stressed out from any other factors. Do any pruning in the fall after insects are no longer a factor. At that point you will not need to cover the pruning wounds with anything and if the tree is healthy it will cose around the wounds itself.

I wish I had better news for you.

* * * *

Mike Maier
aka
The Plant Doc