This is requested feature.
It would be nice to add option --stdout in tool unsquashfs . It soould restore to stdout instead specified file. Similar option is implemented in gnu tar.
This will be usefull for web script that give specified file content without squash archive mounting or extracting to file. Problem is when file is very big. That file should be transferred directly without saving to filesystem. --stdout option will help this. Of course all other unsquashfs messages should be redirected to STDERR handle.