Jamman,
Yes, the water is supposed to be squeezed out. I think Robert had an old Apex that did the same sort of thing. The agitator on the Apex was quite a bit more rounded, very unique.
My take on this is that the mfg's that designed these things were not thinking very outside of the box. Most washers of the day had wringers that squeezed water out of the clothes, either with a hand crank (safer) or a motorized wringer (could be dangerous). The Bendix Economat type of washer simply moved the squeezing process to inside the wash tub... although I understand it was with somewhat mixed results. In some ways, the collapsing rubber tub was simpler than the spinning tub, because it didn't have to have a suspension system or deal with balance issues. But once those issues were figured out by the engineers, obviously the spinning method of extracting water won out over the rubber squeeze tub, probably because it was more efficient and durable. I could see one nail, screw, or metal pen making short work of the squeeze tub.