My experience with squirrelfish (generally squirrelfish, longspine squirrelfish) is a bit different. Though attractive and hardy once established, these fish get rather large (this one probably 7-10 inches) and they can be quite aggressive at feeding time. I do not recommend most squirrelfish in any tank under at least 100g, with equally large aggressive feeders. I tend to agree with the LFS and I would not trust them with smaller fish or in a community tank...not necessarily because they will be eaten (though I wouldn't rule it out), but just in terms of temperment and food competition.
I think they make an excellent, beautiful and underappreciated addition to either a species tank or an aggressive, semi-aggressive system. They are, by nature, a nocturnal fish and may take some time to acclimate to captive conditions.
These fish are often mislabeled as well, so I would be sure, beyond a doubt, that they are correctly identified. They have very sharp spines, and should be handled carefully. They are one of the groups of fish that are actually quite "vocal" and rather noisy when handled.
For a calmer reef I would suggest flame cardinalfish or something.