First, a question about squad and sim/combat.
So let's say 10 fighters are simulated as one unit. And AoE hitting that "unit" will deal its damage 10x. Fine: AoE are meant to harm numerous small ships. But what about a beam weapon? How will it "carve" through the "one unit" squad? Let's say a beam weapon can hit only one unit of the squad, and let's assume the weapon is powerful, so there is a big overkill: a squad hit by a powerful beam weapon loses one small fighter regardless of the power of the beam. Then beams will be more apt at taking down big (potentially immobile) targets, which is already the case for Spire/photon "slow carve" beams. Okay, so we have the basics of a nemesis system that could play next to armor/RoF in removing the artificial mechanic of Hull Bonuses. Why not. But that's only a personal imagination and nothing in the design document address that. And that imagination has drawbacks: the Wrath Lance or some advanced Fallen Spire weapons might be far less dreadful. (However they feature some sort of "harp" beams: a bundle of beams able to carve out a band in big fleets. Maybe we can say "they're multibeam weapons able to hit all ships in a "band" area, so bye-bye squads of fighters that hard-counter Wrath Lances.)
A question about dead ships in squads.
I recently played Homeworld 2, which has squads (in the sens of multiple units simulated as one) and was frustrated to have two "squads" of identical ships with only one surviving unit each and unable to merge them. How will the AIW2's squads handle that? The design document talks about healing/reconstruction but just asks the question. (If the debate is open, I have a suggestion. See below.)
A concern about the "feeling" of quantity.
Also, still speaking of my experience with Homeworld 2, at far zoom I see only one icon, which ruins both my sense of scale (ten squads of ten units feel like ten units, not a fleet of a thousand ships) and readability when incomplete squadrons fight incomplete squadrons. AI War Classic have an auto-count feature with the drag-and-(not)-drop , fortunately. I don't know if it will be enough; I think it will but I'm worried, considered my poor experience with Homeworld 2 (I love the 1, though.)
How I would see it.
This is the way I would do squads, but I might be far from the reality of what is feasible or not. I would make "dynamic" squads: when the player select whatever units (not necessarily of the same kind) and give them an order, they form a squad (if they are close enough) that the engine simulate as having one position and the slowest speed. Units can be added (when given the same order) or removed (destroyed) on the fly. If some faster ships want to be detached, the player select them (double click to select all identical units) and give them a specific order: the squad is split and the faster ships can move at their full speed. The player would still be able to select one unit and send it away, or get 42 fighters and 24 bombers exactly, or divide 100 ships into 50/50 or 25/75 or 7 groups of 14 or 15 ships each. No problem of multiple incomplete squads.
Sure, there is a need to address edge case, like units far apart wouldn't be instantly merged into one squad, etc. But I believe it would address the fears I currently have.