Considering that computing sqrt(N) takes log(N) time (at least), square rooting all the integers that you're sorting will doom you to N*log(N) complexity. And it will just arrange your elements into buckets, as they were before.
Heck, simply _looking_ at an integer takes log(N) time. My bad idea of putting elements into buckets and being smart about that requires log(N) time just to put the elements into buckets, actually, because computing k `mod` n, where k < n^2, still takes log(n) time.