Blend the strawberries into a smooth puree. Pour into a saucepan and simmer over medium heat for 15 to 20 minutes, stirring often, until reduced to 3/4 cup. Cool completely. Reserve 1/4 cup for the frosting.
Preheat the oven to 350 F. Grease two 8 inch round cake pans and line the bottoms with parchment paper. Whisk the flour, baking powder, baking soda and salt in a medium bowl.
In a large bowl, beat the softened butter, vegetable oil and sugar for 3 minutes until fluffy. Beat in 1/2 cup of the cooled strawberry reduction, the vanilla and the food coloring if using.
Add the dry ingredients in two additions, alternating with the buttermilk, and mix on low just until smooth.
Divide between the pans and bake for 28 to 32 minutes until a toothpick comes out clean. Cool in the pans for 15 minutes, then turn out onto a rack to cool completely.
Beat the cream cheese and butter until smooth, then add the powdered sugar, vanilla and the reserved 1/4 cup strawberry reduction. Beat for 2 to 3 minutes until fluffy and pale pink.
Layer the cakes with frosting in between, cover the top and sides, and pile the sliced fresh strawberries on top just before serving.
