My trailer's like these ones: http://www.hobiecatcentre.co.uk/Accessories/StandardTrailer1.jpg

Basically the mast prop slides inside another piece of metal. I think it's 40x40mm into 50x50mm. The bottom piece has a bolt through one side of it, which you do up tight against the side of the inner piece. Low tech, but it works.

You solution sounds reasonable, although I think it depends on the size (section) of the insert. Judging by how much the mast wiggles when on the trailer, the sideways forces on the mast prop must be fairly large. Making the cut as high up as you can get away with would help here.

Paul