Hello, DRG—and welcome to English Forums. " in the middle of a sentence? -- The main problem is that it makes a rather lumpy sentence, but you may use it as you have it ('etc', period, comma) if you like.
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Mister MicawberAs Dr Smith states, "[ B]alls are indeed round!". This indicates that the original text has words before '*****', as for instance "The totality of ***** are indeed round!"That's fine. You could also do it this way As Dr Smith states, "[...] ***** are indeed round!"