Frankly, none of the Posties went down there to investigate ~ they relied entirely on hearsay ~ most of it third hand.
If they had gone down there the little diesel dyke who wrote the story would be out of her nut about Squaw River Lake, and a variety of other interesting place names!
Many places in the united states carry the name squaw. It has no derogatory meaning, except in some pee brains head. There was one of those old urban legends claiming it referred to a females Indians private parts, but that was and is a lie.