You want the HST to measure 2" unfinished.
When you sew 4 of them together , you will get a 3.5" unfinished Square-in-a-Square, just as pictured in your op.
That said, would you consider starting with a 2.25"-ish square and attaching oversize triangles on the four sides (cut two squares in half on the diagonal)?
You get the same exact image. No matching up of design points with all those the seams in the center, and then you can trim it down to a perfect 3.5" block to be used as cornerstones. It's a cleaner look.
Just a thought.