Alright, so I'm going to do as best a write up of my take on Squirtle vs Snake as I can.
With Squirtle, if you can get an early grab, you are almost guaranteed to get a good amount of damage, and here's why.
I've heard a few things about Squirtle's "chaingrab", and that it's not really one. But the fact of the matter is (unless something's changed in the time I've been gone), it is a chain grab against Snake for all intents and purposes. I was even able to do it against Ally. When I get a grab, I tend to get them as close to the ledge as possible. In fact, it's probably safe to say that my mindset when playing Snake is to get him to the ledge, because that's where the fun begins.
Snake really doesn't have many options when he's hanging on the ledge or falling towards you. Let's say that Snake is falling towards you, somewhere near the ledge. Think about it systematically. Snake can airdodge, backair, f-air, up-air, d-air, or grenade. The thing is, all of these options can be countered by just doing an empty hop and seeing how he reacts.
If you watch
http://www.youtube.com/watch?v=cyfdswyMytk&feature=related#t=04m00s at around 4:00, you'll see kind of what I'm talking about. Empty hop, Keep your distance, and see how he reacts, and punish. It's how I do the majority of my damage to Snake. (You can see that with all my videos against Tekk actually. That's my main strat).
Although grenades, at first, seem to ruin this strategy, they really don't. A well spaced F-air or B-air will hit Snake without blowing up the grenade. It's very beautiful
.
Watergun! Watergun stops grenades, and moves Snake to the ledge! Exactly what, as Squirtle, you should be trying to do. When Snake is actually on the ledge, he doesn't have many options (At least, many options that won't be covered by doing the exact same empty hop strat). I know Reflex is fond of throwing Snake upwards (at least, I gather that from his vids), I really feel that moving him horizontally sets him up for more damage. Snake does have a major vulnerability under him though, and that should definitely be exploited. On average though, I do more damage by throwing him off the stage and watching him struggle to get back on, than throwing him up.
(Would love to hear Reflex's opinion on this).
Watch for F-tilt or Jab kill opportunities with Snake
http://www.youtube.com/watch?v=xW0iCXwExAE&feature=related#t=01m10s (I didn't actually kill him. I think it was because we were just doing friendlies...or I messed up lol). I wouldn't say thhese present themselves often, but they do (on occassion)
http://www.youtube.com/watch?v=c1f2g04T3m4#t=05m13s
Obviously, watch out for Up-tilt. It kills Squirtle at ridiculous percentages. If you're at Death Percentage, get him to the ledge, then attack. Use water gun to push him off the stage. Water gun shield pokes, so aim for his head while he's shielding (he'll still move if his head is poking out). The main thing is to not be too quick to throw out an attack. Wait for him to do it first. If he doesn't, then throw out a F-air. You can b-air before he finishes air dodging XD.