1. Red squares, 2. Yellow squares, 3. Blue squares
I have finally swatched, washed, and lightly blocked my testing yarns. Only three of them, in the end: I think I got carried away when I picked the bamboo and cotton yarn, they really won't be suitable for the blanket.
I have worked with 4 different types of squares, two crochet, and two knitting. From the top:
1st row: plain stockinette squares
2nd row: plain garter stitch square
3rd row: square granny square, from Eskimimi
4rd row: circle to square granny square, from the Circles to Squares afhan
Each type of square has its own advantages and disadvantages, of course. The stockinette square is very soft on the one side, but doesn't look nice on the wrong size. The garter stitch square is very square and looks smooth, but takes forever to knit. The square granny square is very quick, but doesn't look as smooth (the circlese square is just simply inferior, but I did that one before I found Eskimimi's guidelines).
As for softness, they all definitely softened in the wash (standard wash -although at reduced spin- and drying). The red yarn is still the softest, but all of them are much softer now.
Currently, my line-up for yarn is Red, Blue, Yellow, but red and blue are very close (you see, red is missing one colour!).
My line-up for the pattern is garter stitch, then Eskimimi's square. Neither of them is perfect, but I suspect that "perfect" may not even be knitted, so this are pretty damn good anyway.
However, I still need to do a quick test on embroidering/duplicating the elements on them. I'm not too sure how the garter will like the added embellishment.