Hi: My daughter has one like that on her forehead (and a smaller one on the other side of her forehead too). I was told to wait it out, then it grew larger, we were put on steroid cream, it made it worse, we were given a referral to a dermatologist and now we have been given a referral to Sick Kids Hospital. I can't help you much with another other info about the resting phase and involution phase other than I heard it will start to change color in the middle and stop being bright red.
I have found EXACTLY the same thing with my daughter and what people see. Everyone asks all the time if I dropped her on her head or "look at that boo-boo, what happened to her?" rather than commenting on how cute she is.
I will post more later when I find out about Sick Kids and what they decide to do next....