What you are trying to do is not a good approach; it will force a surely too big TFTP transfer.
It is better if you mod the initrd in order to turn on the SAMBA/NFS client or even using wget for an HTTP transfer that will bring at boot time your squashfs file.
You can see how this approach is used by Serva (I'm related to Serva development) when PXE booting/installing most of the live distros available today.
http://vercot.com/~serva/an/NonWindowsPXE3.html
you do not need to assembly a completely new initrd just create a complementary one adding the missing components (if any) and the correspondingly updated init script.