We too use squid
We used to use something called Squidalyser (or similar) but found it very processor intensive. It automatically updated a MySQL database every day, and allowed searches by username. Also, you can then choose to see all sites per username, all traffic, or just images. You can also set up groups of users or keywords to search for. I guess it would work best with a dedicated machine to run the database - running it on the same machine as Squid got us lots of 'slow internet' reports.
Right now, I've got a couple of enthusiastic uni students manually checking the logs in their spare time, using 'grep' on linux Works well. Also, I have been invading ICT lessons to do a demo of how we check the logs, and how we can see exactly what they did. No problems recorded since!
I'm thinking of getting the head of ICT to build my demo into the curriculum. Will save me lots of time if the kids take it on board.