I'm sure there are many ways to go about piecing this. I would look at the 1" squares as sashing and apply them along with the sashing between the blocks. Then I would look at the 2" squares as the border, make and apply the two sides (made out of squares) and then make and apply top and bottom.
As it happens, I have that same pattern. Maybe it's time to dig it out and *think* about doing some needle turn applique. That's probably as far as I will get, so I'm looking forward to seeing your finished piece.