You sew straight and a nice 1/4 seam. The extra is allowed for those of us who have trouble doing one or the other of those two items. A quilt pattern publisher I have followed only cuts 3/8" larger. Now that is no leeway - I had to scrap a few when I tried it her way.
Your 1/4" seam is removing 1/2" of fabric whether it's a straight or diagonal seam so you 4 1/2" is understandable.