I think you could correct it, but it would make the bag alot shorter if you went back in and cut that out and redrew the squares and did it correctly.
I'm thinking you'd probably take about 3 inches or more off the height of the bag. That is if I understand what you actually did.
The least you can do is take it apart and unsew the area to see what you have to work with. You might be able to cut off where you messed up and add more fabric to the bottom of the outside and lining pieces and start over. It won't be as obvious with the lining because the pockets will hide the added piece. You could even do something decorative with the added seam on the outside of the bag, however most of it will end up being at the bottom and base of the bag.
Give it a try, as long as you have the extra fabric.