Here it the tarball for squashfs 3.1. there is a 2.4.20 patch in it if anyone (like eviljazz or meanie, maybe?) has a 2.95 corsscompiler and a configured kernel source ready to roll.
The reason I put it up is than in my experience 3.x makes smaller files than 2.x, and 3.x has a higher file-size limit, allowing for bigger squashes. Basically, this would make for a better system than the current 2.x squash in all the 2.4 kernels for the Z, as far as I can tell.
(if you'd guessed by my sudden burst of posts on compressed filesystems, I am working on loop mounting some fairly huge stuff)