If the length is defined as one unit, using Pythagoras theorem the hypotenuse is an irrational number, the square root of two. This length in space must also exist if the other two lengths are absolute, therefore none of the lengths can be absolute. An absolute point cannot exist, only a distribution around a point.
At first glance, what you're saying seems coherent and acceptable. If you prefer to step away from the idea of absolute points rather than working with irrational numbers, that is fine to me. As stated, when it comes down to the actual reality we live in, irrational numbers do not matter. But they do exist, and are very useful in our ideal mathematical world.
So in your mind, or mathematical setup, there are only fractions? If this is the case, which fraction represents sqrt(2)? I'm assuming you can't pinpoint a single one, since, by your proof, exact points don't exist, thus exact lengths can't exist either. While I don't see why you'd work like this, I guess that knowing there's always heisenberg and measurement errors, it shouldn't make a huge diffrence. In the end, when it comes down to real applications, we almost always use rational approximations of our irrational numbers anyways.