It depends on whether you want to give the halfling some chance of survival or not.
The way I see it though is that the halfling has to end up somewhere since the bag doesn't say that he's dead or destroyed, simply "lost forever". As I understand extra-dimensional spaces, the bag contains it's its own little pocket dimension with a portal (the bag's opening) linking it to the prime material plane. If that bag is pierced and thus ruined I'd guess one of two things would likely happen; either the extra-dimensional space continues to exist, albeit without any exit points (since the bag is ruined and doesn't function as a link to the prime material plane any longer) with the halfling trapped inside or the extra-dimensional space collapses and flings the halfling and all other contents into the deep ethereal plane (since, IIRC, all extra-dimensional spaces are contained somewhere within the infinite reaches of the ethereal plane). Either way, it could be assumed that the halfling is lost and unable to return to the prime material plane; that is unless he's somehow able to plane-shift himself back.