Any idea why the hair is gone? Has she been licking it? Has it been rubbed off? It looks gnarly enough that, if it were us, we'd have it taken off before it gets bigger. I agree with your vet: right now it looks like it would be fairly easy to remove but if it got much bigger.... Limbs don't typically have a lot of muscle and supportive tissue to spare, so you want to take off the lump while it's still small and the surgeon won't have to take as much healthy tissue to get a clean margin.
An aspiration might tell you something, but unless it comes back as a benign lipoma (which don't usually cause hair loss), the results are likely to be inconclusive or misleading. At least, that's been our experience with aspiration biopsies...
Still, a biopsy
would give you more to go on and typically, results only take a week or so.