You could probably set up this in timeline settings. Maybe duplicate your working timeline first, just in case. But in timeline settings set up timeline working format resolution to be your original 16:9 no resizing so you can position the clip and for output tab set your square resolution. Something like this.

- sshot-1094.jpg (31.66 KiB) Viewed 296 times

- sshot-1096.jpg (27.35 KiB) Viewed 296 times

- sshot-1097.jpg (228.58 KiB) Viewed 296 times
Not sure if that is what you want. Also you can use square overlay for the viewer to see what you are cropping until you do it at the end.
I would not be nesting anything myself, because it just adds additional complications.
Also fusion offers more controls and better overview of what is happening to resolution in clips, so if you want to you can do it there as well. But timeline settings should offer the main set of option for what you said you need.