I would think as long as you keep your patch well watered and fertilized the marigolds and squash would not have to compete. The drought caused issues with my pumpkins too. There were only 1/3rd as many and they were quite small compared to most years. The May 2 snow storm didn't help, planted a month later than usual! I don't know about composting them or letting them stay in the patch. I certainly don't think it will hurt but not sure if it will help keep them away. I try to till several times after it frosts and late in the day before a hard frost so bugs or larvae are brought up to the surface to freeze over night. Not sure why but I had no trouble with Squash bugs this season, in 2011 and 2012 my patch decimated by them and I tried to get on top of them early!

Thanks Sid!