I'm 99% certain that's an improper way of holding a squirrel, but it's cute in a comic, so there.
Speaking of cuteness, me while sketching this: "Oh no. I'm not sure if this style of squirrel Grace will be cute?"
Me after inking this: "SO CUUUUUUUUUUUUTE"
(Your mileage may vary. Or, if you're NOT in the USA, your kilometerosity.)
Full disclosure: I hadn't planned on Grace's outfit successfully shrinking with her. I was thinking along the lines of "things for Grace's abilities have changed, but there are still limits. This is one of them, and Grace knows it" (it was never going to be an accidental thing).
Then people got excited about the possibility of full squirrel Grace in Grace's outfit. Then *I* wanted to see it, too.
SO TAKE THAT, PLANNED CANON! CUTENESS WINS!
As for how this affects the story, it doesn't, really. It just means additional cuteness and reduced awkwardness. On reflection, it also fits better with other things I have planned, so it's for the better in a lot of ways.
Don't worry, though. There's still plenty of other awkwardness yet to come.