[NewTeaBag]

Having experience in the field, this is near impossible (the 1sq km bomb with limited side effects)in terms of feasability. Winds, ground seepage and other environmental concerns make it impossible to contain the fallout to one isolated area.

You would start with a dense radioactive source area (your orignal target) but over the span of months and eventually years you would end up with a large area lower level source. The larger source would have a reduced strength but would still remain deadly/ disatrous knockon health effects for years as it spread.

Feasibility aside: Nuclear weapons remain purely "strategic political" weapons due to the attached effects and stigma. Attaining basic military "tactical" objectives through their use is both nonproportional and illadvised in that it opens up the attacking nation to retaliation in kind with little room for objection.