I wonder what those bits about Squirrel Stick effect having worn off were about though...?
The squirrel stick heals you 1 point per second for 5 seconds (according to the pipboy screen for it), after 5 seconds you get the message that it has done it's job.
Nice combat video. Though, I hope that's an early portion of the game or that Pete played on easy - for some reason it looked a bit too effortless (despite the healthloss) killing a room full of those convicts (could be just me wearing my critic hat again and having some unexpected seizures though...

).