As you know Squirrel Hunting is a long-standing community request, however it was only about "We want squirrels" or "please place squirrels", without any details on how to hunt them where to find them.
It was repeated many times that the game mechanics make it difficult to recreate the usual behaviour and the way to hunt this species since they are arboreal and the trees in the game do not have support points where the animals can climb or stay.
However, I think there could be a couple of options to make them work, although it would not recreate the exact wild behaviour of the species, it would allow them to be hunted within the game.
1st Option
Since the trees don't have support points then why not place some?
A few days ago a colleague posted an image of a Canada Goose perched resting on a Tree Stand, this suggests that if there is a structure placed the animals could use it, that leads to this first option FEEDERS and CALLER using the Ancient mechanics of the Geese…
Remember that mechanic where Geese weren't on the map but Appeared on the horizon when lures were placed?
Why not recreate that mechanic by reducing the spawn range to a 100m radius around a feeder?
In the same way and in the same place where the Tree Stands are placed, it would be possible to place these feeders and use the caller so that the Squirrels appear and congregate or climb the feeder (similar mechanics where the raccoons climb the buckets of trash) …