Not really a fanfic, but a parody of chapter 47 of the Squid Girl manga (read top to bottom, right to left):
Original chapter: http://mangafox.me/manga/shinryaku_ika_musume/v03/c047/2.html
My abridged version: http://www.crunchyroll.com/showphoto?id=4309012089
Also put up my Squid Girl oneshot on my profile's crunchyroll page or you can check it out on ff.net (let me know with a comment or review what you thought of it):
The above is an alternative narrative to http://www.mangafox.com/manga/shinryaku_ika_musume/v05/c084/4.html in the manga and season 2 episode 4's events. It's rated T, some Eiko/Squid Girl yuri and Sanae jealousy.
Other Squid Girl fics I've read and would recommend:
http://www.fanfiction.net/s/7774311/1/Isnt_That_A_Little_Sudden by Michael Saniyan. Rated T, very cute, innocent relationship story between Eiko and Squid Girl. Quite interesting situations he puts them in.
http://www.fanfiction.net/s/7903683/1/Isnt_it_shrimp by angel0wonder. Rated M, but not too lemony. Short one shot of what would happen if Squid Girl went a little further with Sanae when she visits Squid Girl in a shrimp costume the first time.