Normal squeezing doesn't change how a squeezing creature's Friend interacts with the squeezing creature:
You can move through a square occupied by a friendly character, unless you are charging. When you move through a square occupied by a friendly character, that character doesn’t provide you with cover.
Normal squeezing causes "each move into or through a narrow space [to] count… as if it were 2 squares, and while squeezed in a narrow space, [the creature suffers] a –4 penalty on attack rolls and a –4 penalty to AC." However, that—and halving the squeezing creature's space—is pretty much the sum total of what squeezing does.
It may be easier to imagine this normal squeezing as the creature voluntarily reducing its combat profile. The squeezing creature suffers significant combat and movement penalties while its combat profile is lessened this way, but the creature retains nearly same degree of battlefield significance.
In other words, a squeezing Large ogre in its 5-ft.-by-10-ft. space in a 5-ft.-wide corridor still does not completely and utterly fill its current 2 5-ft. squares. The ogre, for instance, doesn't plug the corridor therefore preventing the passage of everything on either side of it. Instead, by squeezing, the ogre's sacrificed combat efficacy and speed to make its occupied space temporarily less. The squeezing ogre's not made itself a literal obstacle. For instance, creatures can normally still see past the squeezing ogre, allies can still normally move through its space, and enemies can still normally employ Acrobatics to traverse its space.
You can change the rules…
I'm not sure of the house rule that the question's considering, but this player would be uncomfortable with a house rule that says, for instance, that No creature can enter a square occupied by a squeezing creature. That house rule kills not only the half-speed fleeing squeezer—it's already dead because it can't move as fast—, but also it kills all of the squeezing creature's nonsqueezing allies behind the squeezing creature. (After all, under such a house rule, the squeezing creature's half speed is the top speed of anyone behind him.)
This player wouldn't leave a campaign over such a house rule, but every time his PC and his companions had to ride horses along a narrow mountain road (or whatever), his PC'd either take rear or take point because being in the middle is pretty much a death sentence. Further, Large and bigger creatures may use this house rule as a new tactic, squeezing for no other reason except to prevent creatures from using the Acrobatics skill to get past them.
A house rule like this may resolve the initial disconnect between rules and imagination, but long-term use of a house rule like this will require evaluation and playtesting. This relatively straightforward and well-intentioned house rule may end up cascading into a much bigger package of house rules than originally expected.
…But consider changing the name
Instead of a house rule saying that squeezing clogs spaces, the issue might be one of terminology. Think about at your table calling the term squeezing something else that doesn't have the same baggage or connotations as squeezing, like scooting or inching. Then use the term squeezing exclusively when a creature takes 1 min. and makes an Escape Artist skill check to Move Through Tight Space.
