I think there are different types of red squirrel. Ours are pine squirrels and they also taste like turpentine. I do eat them year round as they are not a license game animal and can be taken at any time. Best eaten in a stew, they never really taste good, but they are edible.
We also have a red flying squirrel - quite large and tasty - but they are nocturnal and are seldom seen in day light.
To skin a squirrel - you have to do it immediatley. Cut off the feet, slit between the two rear legs and around the bung hole and tail, and pull the skin off the body in a tube. When the skin gets up to the head, cut off the head. It the body is still warm, it goes quickly. I then gut the squirrel. If you want to keep the skin for use as a bag, all you have to do is work the skin, and sew up one end of the tube. Being the skin is so thin, it doesn't really need to be tanned - unless you think it might get wet.
PG