How exactly do I create a variation of a .tpl file?
If you are trying to override panel page template then I am afraid you are using the wrong hook, hook_preprocess_node works for node pages only.

However panel page goes through hook_preprocess_page, so you can add custom template suggestion in following way.

/**
 * Implements template_preprocess_page().
 */
 function MODULEORTHEMENAME_preprocess_page(&amp;$variables) {
    if (module_exists('page_manager') &amp;&amp; count(page_manager_get_current_page())) {
        $variables['theme_hook_suggestions'][] = 'custom__panel';
    }
 }


Then create custom-panel.tpl.php

Reference: 
page.tpl.php override for Panels Pages?