Square tube is an excellent idea. I had similar thoughts about intersecting square tube with the round swingarm tube on my quad; it'll make a decent mount for a chain slider.
The benefit to square tube, aside from the points you brought up, is that you can notch it with a hole saw for a clean intersection with round tube.
I hope you detail every step. I can't wait to learn about incorporating the cushdrive and CVT.
I have access to a small crank / #40 chain Comet TAV for cheap, and I'd love to build a diesel bobber with it. The TAV was originally designed for a 6.5hp gas engine, but the #40 chain should work nicely with a higher torque diesel.