My rabbit Rex has an outdoor pen that he uses during the summer (only during the day and he is always supervised) and in one summer he dug a hole that went about 1m deep at its deepest, and was almost 5m long. It had 3 entrances and several tunnels branching off it.
Is the hole your rabbits pen or is it somewhere else like your yard?
If the hole is in the hutch/cage then I would think it would be fine AS LONG AS SHE DOESN’T DIG OUT! I suggest that you dig down around the cage and bury a fence about 2-3 ft deep to stop her from escaping or to stop something else from using the hole as an entrance and hurting your bunny. Most rabbits are perfectly comfortable living in holes and small places so she shouldn’t get stuck. Your bun will most likely prefer her hole to whatever hide-houses you provide, which isn’t really a problem since her hole is more insulated and probably safer anyway.
If the hole is not in her cage or in a secure location, then you shouldn’t be allowing her to dig a hole. If she goes in you can’t force her to come back out, you have to sit and wait, which could take hours.
The biggest danger of allowing your rabbit to dig a hole is the risk of it collapsing. It’s usually sturdy when the rabbit digs it, but when someone walks on top of the tunnel by accident it could collapse with the rabbit in it. I used orange flags to mark Rex’s tunnel and did collapse several tunnels on purpose to keep it safe.
There are TONS of benefits to having your bunny indoors, and I highly suggest it. I realize that you are a kid and that your parents have final say, but you need to be a responsible pet owner too.