I would simplify the blocks by using HSTs, and to simplify the math, I would also go with a finished 16" block. Cut the large squares 8.5", and make the HSTs finish at 4" (raw 4.5").
The following tutorial makes a different size block, but you can see the placement of the squares and HSTs in the diagram.
http://www.cascadequilts.com/2011/02...-tutorial.html