No way would I go to the trouble of cutting that up. I'd use another design--maybe a row of pinwheels or checkerboards?--to make that panel bigger, border it and call it good. If you put another design with it, you might want to divide it to put the extra row between the letters but the 3 yr. old won't care what you do. He'll just love that you did it for him.
Since you have 24", you could cut that into 12" blocks and use alternating blocks as previously suggested. Any left-overs could be used as cornerstones in the quilt border or the border on a matching pillowcase.