I have done many quilts that center on panels. For me, the idea is to treat it like any other medallion, so, no, I would not square it up. Because that panel is so large, IMHO, the next layer out should also be fairly big, perhaps 10 or 12" blocks with your fussy cuts, using sashings to make it come out even. Of course, there is not rule that all blocks have to be equal in size. One way to do that would be uneven 4 patches using other fabrics for the alternate squares. If you have enough, you could use those clear out to the border. If not, add as many boders as you need to make it work. There are many excellent ways to do this. I like a folded ribbon (like a Carpenter's Star), half Dresden plates, facing in alternate directions. Braids or Chinese Coins work well. Recently, I saw a wonderful half hexagon French braid on Fons and Porter. It went together like a dream. It would make an excellent inner coordinating border. Whatever you do, I am sure your DGD will love it.