What do you do when the existing space for the tub is not square? I have 1.75 inches on one end and 1.25 inches on the front right corner. Is it best to fir out the walls to correct?

Stan, this is going to sound funny but how do you know it isn't the side walls that are out of line? If you plan to tile you can fur out some pressure treat lumber strip for under your backer board.