Oh No! Squish. is the 3rd level of the Taxing difficulty from the demo disk included with the Lemmings: The Official Companion strategy guide book.
Strategy[]
Have the first or second Lemming dig and build to make a holding pit for the others, and max out the Release rate. If the first was used, make a right-facing climber to become your trailblazer. The method given by the guidebook involves dodging the precise trigger point of the Grinder Trap, which aligns with the left edge of the wheel. When the free lemming gets just before these points, it should dig 4 pixels down then bash, creating divots that will allow lemmings to pass by them safely. Once the path is made past all four, build to free the rest of the lemmings.
Gallery[]
Activation points of the grinding wheels
Path to the exit, with lemmings safely bypassing wheels