I) Here we will assume that OP is talking about a relativistic point particle with zero spin in a $d$-dimensional Minkowski spacetime with metric $\eta_{\mu\nu}$ of sign convention $(−,+,\ldots,+)$. Also we put $c=1$ for simplicity.
Note that the relativistic point particle has world-line reparametrization invariance, which is a gauge symmetry/redundancy in the formulation. We are (to a large extent) free to parametrize the world-line of the point particle in any way we wish. Let us call the world-line parameter for $\tau$ (which does not have to be the proper time). This gauge freedom can be encoded in an einbein field $e=e(\tau)>0$. The resulting Hamiltonian Lagrangian is$^1$
$$ L_H~:=~ p_{\mu} \dot{x}^{\mu} - \underbrace{\frac{e}{2}(p^2+m^2)}_{\text{Hamiltonian}}, \tag{1} $$
cf. e.g. this Phys.SE post.
Here dot means differentiation wrt. $\tau$. The square of the momentum vector is
$$\begin{align} p^2~:=~& \eta^{\mu\nu} p_{\mu} p_{\nu}\cr ~=~&-(p^0)^2+{\bf p}^2\cr
~=~&-2p^+p^- + {\bf p}_{\perp}^2, \end{align}\tag{2}$$
where we have used light-cone coordinates in the last expression.
II) Static gauge $x^0=\tau$. If we integrate out $p^0$ and $e$, we get OP's square root model
$$\begin{align} \left. L_H\right|_{x^0=\tau}
\quad\stackrel{p^0}{\longrightarrow}&\quad
{\bf p}\cdot \dot{\bf x}- \underbrace{\left(\frac{1}{2e} + \frac{e}{2}({\bf p}^2+m^2)\right)}_{\text{Hamiltonian}}\cr\cr
\quad\stackrel{e}{\longrightarrow}&\quad
{\bf p}\cdot \dot{\bf x} - \underbrace{\sqrt{{\bf p}^2+m^2}}_{\text{Hamiltonian}} .\end{align}\tag{3} $$
For sufficiently short$^2$ times $\Delta \tau=\tau_f-\tau_i$, the path integral becomes$^3$
$$\begin{align}& \langle {\bf x}_f,\tau_f \mid {\bf x}_i,\tau_i\rangle\cr
~=~&i\hbar\Delta\tau\int_{\mathbb{R_+}} \!\frac{\mathrm{d}e}{2} \int_{\mathbb{R}^d} \!\frac{\mathrm{d}^dp}{(2\pi\hbar)^d} \exp\left[\frac{i}{\hbar}\left( p_{\mu} \Delta x^{\mu}
-\underbrace{\frac{e}{2}(p^2+m^2)}_{\text{Hamiltonian}}\Delta\tau\right)\right]\cr
~=~& \int_{\mathbb{R}^{d-1}} \!\frac{\mathrm{d}^{d-1}{\bf p}}{(2\pi\hbar)^{d-1}}
i\hbar\Delta\tau\int_{\mathbb{R_+}} \!\frac{\mathrm{d}e}{2}
~\underbrace{\frac{1}{\sqrt{2\pi\hbar ie\Delta\tau}}}_{\text{Gauss. } p^0\text{-int.}} \cr
&\exp\left[\frac{i}{\hbar}\left( {\bf p}\cdot \Delta {\bf x} -\underbrace{\left( \frac{1}{2e} + \frac{e}{2}({\bf p}^2+m^2)\right)}_{\text{Hamiltonian}}\Delta\tau\right) \right]\cr
~\stackrel{(6)}{=}~& \int_{\mathbb{R}^{d-1}} \!\frac{\mathrm{d}^{d-1}{\bf p}}{(2\pi\hbar)^{d-1}} \frac{\hbar}{2\sqrt{{\bf p}^2+m^2}} \exp\left[\frac{i}{\hbar}\left( {\bf p}\cdot \Delta {\bf x} - \Delta \tau \underbrace{\sqrt{{\bf p}^2+m^2}}_{\text{Hamiltonian}}\right)\right]\cr
~=~&i\hbar\Delta\tau\int_{\mathbb{R_+}} \!\frac{\mathrm{d}e}{2}
~\underbrace{\frac{1}{(2\pi\hbar ie\Delta\tau)^{d/2}}}_{\text{Gauss. } p\text{-int.}}
\exp\left[\frac{i}{2\hbar}\left( \frac{(\Delta x)^2}{e\Delta\tau} - m^2e\Delta\tau\right) \right]\cr
~\stackrel{(6)}{=}~&\frac{1}{(2\pi)^{d/2}}\Big(\frac{m/\hbar}{ \sqrt{(\Delta x)^2}}\Big)^{\frac{d}{2}-1}K_{\frac{d}{2}-1}\Big(\frac{m}{\hbar}\sqrt{(\Delta x)^2}\Big)
,\end{align} \tag{4} $$
which also happens to be the standard scalar propagator $\langle\Omega|T[\phi (x_f)\phi (x_i)]|\Omega\rangle $ in QFT/2nd quantization, cf. e.g. Refs. 1-3. From a 2nd quantized perspective, the $e$-integration in eq. (4) is a Schwinger parametrization of the Fourier transformed propagator $$\frac{i}{\hbar}\langle\Omega|T[\widetilde{\phi} (p_f)\widetilde{\phi} (p_i)]|\Omega\rangle~=~\frac{\hbar^2}{p_f^2+m^2-i\epsilon}(2\pi\hbar)^d\delta^d(p_f\!+\!p_i). \tag{5} $$
As is well-known, eq. (4) is Lorentz covariant and falls off exponentially outside the light-cone. In eq. (4) we have used the integrals
$$\begin{align}
\int_{\mathbb{R}_+} \!\frac{\mathrm{d}e}{e^{1+\nu}}\exp\left[-ae-\frac{b}{e}\right] ~=~&2\left(\frac{a}{b}\right)^{\nu/2} K_{\nu}\left(2\sqrt{ab}\right),\cr
\int_{\mathbb{R}_+} \!\frac{\mathrm{d}e}{e^{1-\nu}}\exp\left[-ae-\frac{b}{e}\right] ~=~&2\left(\frac{b}{a}\right)^{\nu/2} K_{\nu}\left(2\sqrt{ab}\right),\cr
\int_{\mathbb{R}_+} \!\frac{\mathrm{d}e}{\sqrt{e}}\exp\left[-ae-\frac{b}{e}\right] ~=~&\sqrt{\frac{\pi}{a}} \exp\left[-2\sqrt{ab}\right],\cr {\rm Re}(a), {\rm Re}(b)~>~&0.\end{align}\tag{6} $$
III) Light-cone gauge $x^+=\tau$. If we integrate out $p^-$ and $e$, we get
$$\begin{align} \left. L_H\right|_{x^+=\tau}
\quad\stackrel{p^-,~e}{\longrightarrow}\quad & -p^+\cdot \dot{x}^-
+{\bf p}_{\perp}\cdot \dot{\bf x}_{\perp}\cr & - \underbrace{\frac{{\bf p}_{\perp}^2+m^2}{2p^+}}_{\text{Hamiltonian}} .\end{align}\tag{7} $$
IV) We stress that the Euler-Lagrange (EL) equations for either of the Hamiltonian Lagrangians (1), (3), and (7) lead to Hamilton's equations. The point is now that physical quantities should not depend on the choice of gauge-fixing. We are free to use the most convenient gauge choice. Each formulation (1), (3), and (7) are valid, and have their pros and cons. The static gauge choice (3) is disfavored because of the square root.
References:
M.E. Peskin & D.V. Schroeder, An Intro to QFT; eq. (2.50).
M.D. Schwartz, QFT and the Standard Model; eq. (6.25).
O. Corradini & C. Schubert, Spinning Particles in QM & QFT, arXiv:1512.08694; subsection 1.5.1, eqs. (1.160-162)
T. Padmanabhan, QFT: The Why, What and How, 2016; subsections 1.3.1 + 1.4.4.
--
$^1$ Strictly speaking, there are also Faddeev-Popov ghost terms and gauge-fixing terms, which we have ignored for simplicity. These action terms are consistently generated in the BFV formulation, cf. e.g. my Phys.SE post here. The normalization factor in eq. (4) can be derived via Gaussian integration in the BFV formulation over the 2 bosonic variables $x^0$, $B$; and the 4 fermionic variables $\bar{C}$, $P$, $C$, $\bar{P}$.
$^2$ Here we just consider a single time slice for simplicity. The full path integral is the continuum limit of multiple time slice discretizations with insertion of corresponding completeness relations. It turns out that the result (4) for the free theory does not depend on the number of time slice discretizations.
$^3$ Here we use the Feynman $i\epsilon$-prescription ${\rm Re}(i\Delta\tau)>0$. The Gaussian integration over $p^0_E=i p^0_M$ becomes damped after a Wick-rotation $\tau_E=i\tau_M$, $x^0_E=ix^0_M$ to Euclidean signature.