I saw this a few days ago on another online news feed. Very touching -- a mother cat and her kittens raising their future meal.
Honestly, cats do try to catch & eat squirrels, and it will be interesting to see if these cats continue a friendly relationship with the squirrel as it matures. Plus there's also the issue of other cats, who could come into the yard and try to kill this squirrel, it not being able to recognize the danger from cats other than the friendly ones it knows, and not fleeing from the other cats as a wild squirrel would.
I hope there are follow-ups to this story.