I use Shorewall for my Linux firewalls, so I am a bit rusty at IPTABLES. Just to insure we are on the same page, you want port 80 requests to ether1 not from the squid-box DSTNATed (redirected) to a Squid proxy server (localnet?).
It may be easier to answer if you post a brief description of your net, and what you want to do.
The squid box is on the public net? The only Squid proxy I have used was in the router/gateway (Linux x86 box). A simple port redirect was all that was needed. This is out of my realm of experience. Hopefully, someone with that type of proxy server setup will come along…