Squad armor gives an extra 30 hp "armor" on the healthbar. It's grey so you can tell it's different from normal hp
Simple things like what metruption talks about is how those squad powers should work. Physical effects that aren't timed based and easy to see. A fun thought would be being able to stack powers to a point. In metruption's example if you could do the skill again up to have 60 extra armor. It's still out classed by heal, but because heal can be hard to use exactly when you need it it gives the pushing party breathing room, not to mention that the people who aren't hurt don't get anything out of heal they do get something out of squad armor.
Well you'd change the points used for the power too, I see absolutely no reason to keep it at 4. You have a point but I say squad armor is an awkward thing to make use of. To phrase this another way half the time I don't see the difference between engy and rifleman even though rifles should definitely be able to take an extra bullet. Squad armor is a similar thing. Same with damage upgrade, which is why the suggestion to increase max ammo in a clip or something would make it seem more useful.
Oh I definitely remember dig in people refusing to die, but that's it - dig in people, not armored people or squad armored people.