A squared circle is a terrible example of a paradox. There's much more going in with the phrase than one would interpret in a geometric sense.

The circle in question is not a prototypical circle, they are referring colloquially to a circle on the ground where it is customary to engage in hand to hand combat. Squared is altering that meaning, not the meaning of a prototypical circle.

Squared circle means we have an area meant for combat (just like it's round counterparts that tradition cemented into our language), except this one is square.

It sort of fits into a pattern of "isn't it crazy we drive on the parkway and park in the driveway." Yea.. that's what we call it.. crazy huh.