Squat?

I have heard a lot about starting the downswing with a squatting move, but I have also heard this is an illusion due to the right shoulder driving down the target line and left shoulder rising. Which one is correct?

Well, it depends on how far you want to take the 'squat'...

You need to be in a 'squating' position for a fraction of a second as the club starts to drop into impact. Your knees have to keep on moving, leading the hips and torso - all as a single movement so in fact other than in passing, you shouldn't be in a squatting position.

I find that I have a squat, when I start my downswing, I have a squat I think it is caused by a lateral movement, but as I turn my hips my left leg starts to push off the ground to help my speed my hip turn and create a solid left side to rotate my right side around.

The squat is something that "happens" thru the proper use of the hips in the transition. As you make the small bump to the left,initiating the downswing,the squat happens all on its own.In this sequence of Badds,the photo on the far right shows a definate squat,it just happens. Make a proper pivot and the 'squat' will take care of itself.
http://redgoat.smugmug.com/gallery/80521