@jean_lemire_1 was 100% right. The dashed line has nothing to do with “square” or “golden section” !
The dashed line in this case is a warning that an extra edge will be needed to obtain a segmented surface.
Both the possible cursor indications: “From Point Square” and “From Point Golden Section” are false and misleading. The cursor information in these cases should be left out completely or “From Point (no rectangle)”.
The manual about the rectangle tool should mention the dashed line as being a warning.
SketchUp’s code is not buggy in creating geometry. The text on screen should be taken care of.
altered: “…is not buggy…” in “…is not buggy…”