That would mean the hole punch is VERY deep into the screen. Even more of a nuisance than the current notch.Probably because the TrueDepth sensor hardware is above the pill shaped cutout containing the one or two RGB camera(s).
We know Face ID is under the display, which means it’s outside the pill cutout. The display area on top of Face ID probably has lower resolution, which means it’s still usable for status icons and clock but not great for other elements.