A good sidetone is a clean sinewave at your favorite frequency, and it should switch on and off without clicks. The one I chose is based on simple a twin-T oscillator running at low voltage and low current to limit the transistor’s gan-bandwidth product. It produces pleasingly low distortion and noise.
The first thing you have to do is avoid coupling any changes in dc level to the audio output when switching between transmit and receive. If you study the schematic, you’ll see a .47 uF capacitor before the T/R switch and volume control. That’s all it takes. Don’t put the coupling cap after the switch!
The other thing you must avoid is suddenly turning the oscillator on an off, which generates nasty transients, identical to key clicks. I used an RC combination to limit the slew rate of the T/R control signal that operates the 2N7000 switching transistor. The result is a crisp and click-free sidetone with a modest parts count.