Taken from Mathematics and Its History Book by John Stillwell, page 8.
Please check if there are any flaws in my answer (have I actually understood the meaning of "arbitrarily close" and also, if you could suggest a more elementary answer, I would appreciate it.
Solution
Each and every possible right angled triangle with hypotenuse $1$, and sides $x$ and $y$ can be uniquely indexed with one of it's angle, $\theta$ defined between the side $x$ and the hypotenuse.
For $0 < \theta < \frac{\pi}{2}$, it covers all possible such triangles.
$$\{(x,y) | x^2 + y^2 = 1\} \sim \{\theta | (\sin \theta)^2 + (\cos \theta)^2 = 1\} $$
Thus we need to show that it is possible to find 2 rational sides $p$ and $q$ for any given level of precision (say n digits) such that the error between them and the real sides is less than $10^{-n}$. Note they say that $n$ can be arbitrarily chosen. i.e.
$$|p-\sin \theta| < 10^{-n} $$ and $$|q-\cos \theta| < 10^{-n} $$
There exists such a $p,q \in \mathbb{Q}$ for any $n \in \mathbb{N}$ and $0 < \theta < \frac{\pi}{2}$
We can show this using the Taylor series of $\sin$ and $\cos$, we can evaluate upto the required number of terms until we reach the required arbitrary threshold.
$${\displaystyle {\begin{aligned}\sin(x)&=x-{\frac {x^{3}}{3!}}+{\frac {x^{5}}{5!}}-{\frac {x^{7}}{7!}}+\cdots \\[8pt]&=\sum _{n=0}^{\infty }{\frac {(-1)^{n}}{(2n+1)!}}x^{2n+1}\\[8pt]\end{aligned}}}$$
$${\displaystyle {\begin{aligned}\cos x&=1-{\frac {x^{2}}{2!}}+{\frac {x^{4}}{4!}}-{\frac {x^{6}}{6!}}+\cdots \\&=\sum _{n=0}^{\infty }{\frac {(-1)^{n}x^{2n}}{(2n)!}}\end{aligned}}}$$
Since the finite sum of rational numbers are sure to be rational, the desired $p$ will be the truncated taylor series of $\sin \theta$ and $q$ will be the truncated taylor series of $\cos \theta$.

As pointed out in a comment, your proof is incomplete if not flawed, because the condition $p^2+q^2=1$ is not justified/satisfied.
An easier way to construct $(p,q)$ is to use Pythagorean triples of the form $(2mn,\, m^2-n^2,\, m^2+n^2)$. For any fixed positive integer $m$, let $p(n)=\frac{2mn}{m^2+n^2}$. It can be shown that $0\le p(n)-p(n-1)\le\frac2m$ for every $n\in\{1,2,\ldots,m\}$. Hence $p(n)$ can be made arbitrarily close to any $a\in(0,1)$. In turn, $q(n)=\frac{m^2-n^2}{m^2+n^2}=\sqrt{1-p(n)^2}$ is arbitrarily close to $b=\sqrt{1-a^2}$.