From Cosmo (Jonah Goldberg's dog) at NRO this story about squirrels attacking and killing a dog. According to the article, it sounds like this is just being treated as a curiosity. I'd be rather concerned if I lived in the area. If the squirrels can kill a dog, they can kill a child.
On the other hand, the more likely explanation is that the dog was already dead and the squirrels were just eating it. Most animals will eat meat when it is available. Passers-by probably just heard a different dog barking and assumed it was the one the squirrels were eating.