Old chimney stove-pipe sticks out from wall

[rubes2112]

Thanks in advance for any thoughts/ideas people might have on this. Here's the situation:

I am trying to fix a wall in one of our bedrooms. It has an old stove-pipe sticking out about 1/8" from the wall. One of the previous owners had plugged it up with one of those metal covers and plastered over it (creating an ugly mound which sticks out like a sore thumb). What I did was chip away the old plaster in the shape of a rectangle with the hopes of replacing it with a piece of drywall. Since the pipe sticks out, I dug a circular "trench" in the back of the drywall to match the outline of the pipe. This allows me to put the drywall over the pipe now without it sticking out. However, I still want to cover the pipe (putting the old cover back makes it stick out too much). The chimney is steel lined and is only attached to a rarely used wood burning stove on the 1st floor.

I'm thinking about putting some brick pieces in the pipe and cementing it up (somebody did that to an old stovepipe which is sticking out of our other chimney which is exposed in our bathroom). Does that make sense? If so, what product should I use? Any other ideas?

Thanks!