ETA: There is now a third thread, so send new comments there.
Since the first thread has exceeded 500 comments, it seems time for a new one, with Eliezer's just-posted Chapter 33 & 34 to kick things off.
From previous post:
Spoiler Warning: this thread contains unrot13'd spoilers for Harry Potter and the Methods of Rationality up to the current chapter and for the original Harry Potter series. Please continue to use rot13 for spoilers to other works of fiction, or if you have insider knowledge of future chapters of Harry Potter and the Methods of Rationality.
A suggestion: mention at the top of your comment which chapter you're commenting on, or what chapter you're up to, so that people can understand the context of your comment even after more chapters have been posted. This can also help people avoid reading spoilers for a new chapter before they realize that there is a new chapter.
In canon, the word ‘Squib’ means precisely a Wizard-born Muggle, just as ‘Mudblood’ means a Muggle-born Wizard. (The only thing that's not analogous is that the latter term is used only as a slur.)
The Harry Potter Wiki describes differences between Squibs and Muggles that are minor and could easily be cultural or due to spells that deliberately distinguish them. (In Book V, Mrs Figg claims that she can see Dementors, and the Ministry's ignorance of Squibs allows them to believe her, but Harry seems to think that she's lying.) Squibs and Muggles should be the same phenotype.
So Harry is wrong to conclube that ‘Squib’ means someone heterozygous. The parents of Muggle-borns must also be heterozygous, even if those parents are not themselves Squibs. (I see from the latest chapter, however, that Hermione's mother is a Squib!)
On reflection, this is the only thing wrong. So we can chalk it up to Harry's unfamiliarity with the proper terms, or even say that he was oversimplifying for Draco's benefit.
(Canon does have some Squibs with two Wizarding parents. But we've never seen any details of their home lives, so one could easily blame this on adultery. I remember reading some study, based on DNA samples, that concluded that children are surpsingly often not related to their putative biological fathers.)
Why would Harry's dad have significantly more trouble than his mum with looking at the trunk? Does Petunia register as a squib to the Muggle-repelling charms? Is it easier to think about magic if you were exposed to it earlier in life? The narration seems to imply that the blood hypothesis is true, but this later turned out to be false.