Removing a Wood Stove Flue Pipe

Topic: 
Heating and Cooling
Topic: 
Healthy Home and Environment
Question: 

We have decided to remove a wood stove from our living room and my husband has removed the pipe from the wall (chimney). When he originally installed the stove, he chipped a hole in the chimney and inserted a horizontal clay pipe. Now that the stove pipe has been removed, he has inserted a galvanized end cap on the end of the clay pipe. He says he is going to place a piece of wallboard over the opening in the wall.

My question is: Does the edge of the cap need to be sealed? If he doesn't seal it and then covers the hole in the wall with a piece of wallboard, will this be dangerous? I don't know who to ask about this and I don't totally trust my husband's judgement.