1) straight edge and compass constructions allow us to construct circles and lines and their points of intersect. As lines are of the form $y=mx+b $ we can construct all rational numbers. As circles are of the form $x^2 + y^2=r^2$ We can construct irrationals that are some combination of square roots.
So the square root of 7 is not a problem. (We construct a right triangle with sides 2 and 1 and the hypotenuse is root (5). We construct a right triangle with sides 1 and root (5) and the hypotenuse is root (6). We construct a right triangle with sides root (6) and 1 and the hypotenuse is root (7).)
2) $\sqrt {7}\times\sqrt{7} =7$ by definition. We define $\sqrt{7} $ to mean the positive number when multiplied by itself equals $7$. The real question is how do we know there is such a number and that it is unique.
We know such a number exists because $2.5^2=6.25 < 7$ and $2.7^2=7.29 > 7$. We know that numbers are a continuum and between any two numbers we call find an infinite of others of every intermediate value. Between $2.5$ and $2.7$ there are real numbers for all quantities and their squares can describe all intermediate values between $6.25$ and $7.29$.