To answer your second question...at adult level referee does nothing, at underage it is deemed illegal (as it is dangerous) and is a penalty offence(in Ireland anyway)
...However when a player plays squeezeball, we expect the ball to be pushed back very quickly, with no delay, because a player in that position is lying on the ball in contravention of Law 15.5 (a)
[LAWS]15.5 THE TACKLED PLAYER
(a) A tackled player must not lie on, over, or near the ball to prevent opponents from gaining possession of it, and must try to make the ball available immediately so that play can continue.
Sanction: Penalty kick[/LAWS]
[LAWS]15.5 IL GIOCATORE PLACCATO
(a) Un giocatore placcato non può giacere su, oltre o vicino al pallone per impedire agli avversari di guadagnarne il possesso e deve cercare di rendere il pallone disponibile immediatamente in modo che il gioco possa continuare.
Sanzione: Calcio di Punizione
[/LAWS]