In a large skillet, cook onion and garlic in hot oil just until tender. Stir in squash; cook for 3 to 5 minutes more or just until tender, stirring occasionally.
Stir in half of the green chile peppers, 1 teaspoons of the chili powder and 1/4 teaspoons black pepper. Cook and stir for 1 minute more. Set aside.
For sauce; In a saucepan, melt butter over medium heat. Stir in flour, salt, 1/8 teaspoons black pepper, and remaining chili powder. Cook and stir for 1 minute.
Stir in milk. Cook and stir until bubbly. Remove from heat. Stir in 1 cup of the cheese until melted. Stir in the remaining chile peppers. Stir 1/2 cup of the sauce into squash mixture.
Spoon 1/3 cup squash mixture down the center of each tortilla; roll up. Place tortillas in a lightly greased 2-quart rectangular baking dish. Top with remaining sauce. Cover and bake about 25 minutes or until heated through. Top with tomato and remaining cheese.