It's one thing if this baby squirrel was just unafraid...but he was pointedly approaching any and all humans. Even if rabies is not common in squirrels, it's not unheard of. Obviously it's different in Sweden, but in the states it is drilled into veterinary student minds "mammal+neuro signs? DO NOT EVER ignore rabies". The only time you can rule out rabies is when the animal lives too long with its neurological signs to have had rabies. Yes, the shot does HELP, but it's not a cure-all...and if you don't get vaccinated until symptoms show it does not matter at all.

Just because it HASN'T happened does not mean it CAN'T. I'd feel pretty shitty if some kid got rabies from a squirrel on MY watch. If I didn't have my ass sued off in this country

As for why he just sprayed it and stood there, I'm not sure what was going on, but I'm not sure we can judge him too harshly given that the video does not continue very long past the spraying and we can't really see the surroundings (or even all of the cop very clearly). It could be someone was standing just off to the side with a box and they didn't want to approach the writhing squirrel in case the pain made it bite. Or any number of reasons why he didn't immediately move to recover the squirrel *Shrug* I could be giving them too much benefit of the doubt, but I just don't think we have enough information as to what was going on. It's not like they didn't catch it in the end anyways. They did, the squirrel was apparently fine (I hope...) and released. No harm, no foul, eh?