An inquisitorial henchman army of squats, with things like dreadnights and storm ravens done up as awesome squat war machines... that could be one of the most awesome ideas I've ever heard of.
They used to make squat terminators and the like too I believe all the way back in rogue trader/2nd edition. That'd make for an awesome unit of paladins, especially since squat technology was supposedly centuries ahead of the
IoM. It would make the crazy rules they have actually make sense.
The other thing I usually hear squats counted as are
IG, which I am much more familiar with (hence the avatar) It's also a fluffy answer, as several squat worlds fielded
IG regiments back in the rogue trader days. There are even a ton of pictures of them with lasguns and flak armor fighting alongside regular guardsmen. It wouldn't be a stretch to claim that a particularly badass group of squats have managed to keep their regiment going since the tyranids wrecked their homeworlds, determined to avenge their fallen race.
Then for
IG, you have the fact that
IG can field more vehicles than almost any other army, which if I remember correctly, was something squats were known for as well. I've seen several squat mech armies that look awesome, especially the ones with modified Leman Russes.
The third option is to pick a codex that has a cool bike army option available, as they had a lot of biker units back in the old days. Then, you could buy up a ton of the old squat units, and field a proper biker army!
However you take it man, let us know when you start it up, as it's bound to be awesome!