With real-property squatting is using what someone else owns (land) w/o permission. Domains are only rented. If you rent land but don't use it the way someone else would it's not squatting. So, renting a domain that someone else wants and not using it in the way they think it should be used isn't squatting, correct?
I agree it's a problem when I want a domain and it looks unused to me. I don't think it's really squatting.
I think it's also a jerk move to control resources just to extract w/o developing those resources. But that also happens with real-property.
All that to say: "squatting" on a domain is a "hard problem".