I have never personally used this method - I came across it in my research for Truenotes - I have used garlic and dandelion milk to remove warts, but never a mole. The moles I have seen removed were done with the cancer salve - however, this is painful and leaves a large hole to heal up. (I would not be comfortable using this next to the eye unless I was sure it was cancerous and worth the risk)
My guess is (using the oregano) that it will begin to break it down and yes, I would expect it to scab up as it falls apart. I would definately keep it covered, but, with it being near the eye, this might be a good solution to the problem as it would not be nearly as dangerous as some of the alternatives.