I think one combo that would work would be:
Smaller strips 1.5x3.5" and the larger strips 2.5x6.5". Should lend a 6.5 blocks (with the 4 small blocks going together to make one block). :-D :-D I really like that layout for the rail fence.
edit: I just saw you are wanting to end up with 12" blocks. One 4patch of the larger blocks and 16 of the smaller blocks will each be 12.5" unfinished...12" finished. I think.