You could, and there are many similar definitions equivalent to the usual axiomatic one. It seems from the context, though, that the reference you mentioned is constructing $\mathbb{R}$ from a standard set of axioms, and the particular properties of $\mathbb{R}$ necessary for that equivalence haven't been introduced or proved yet. In one direction, any nonzero $x$ has either $x\in P$ or $-x\in P$, forcing $x^2 = (-x)^2$ to lie in $P$ by axiom (ii). But why does the converse hold? It doesn't hold for $\mathbb{Q}$; it depends on (for example) the completeness of $\mathbb{R}$, which is nontrivial. You may be thinking of a specific definition of model of $\mathbb{R}$, but that's not necessarily how it's defined or constructed in that text. For all I know, the author may be planning to work with hyperreals and is defining $\mathbb{R}$ to eventually lead to that goal.
Anyway, the relevant criterion for a definition is whether it's useful--- not (or at least not necessarily) in the sense of a real-world application, but in understanding what's actually going on and helping to develop more math. Unlike the standard definition, your definition doesn't generalize; number fields (e.g., $\mathbb{Q}$) have elements that are positive but aren't squares, and every complex number is a square. It isn't obvious in the definition that you give that $\mathbb{R}^{>0}$ and $\mathbb{R}^{\geq 0}$ are closed under addition, multiplication, or division. There are notions of positivity in other contexts that we want to have similar properties to this one (e.g., the sum of positive elements is positive) but have no inherent notion of squaring.
Ultimately, math is a game with an undefined goal but very strictly defined rules. You're allowed to define the rules you want to play with, but once you set them, you're stuck with them and their inevitable logical conclusions. The definition you propose isn't inherently bad, but it's probably not the right one for the particular game the reference you mention is playing. It's like printing the instruction manual for a board game in Esperanto: The same information is there, but you've obfuscated the game without any real benefit.