The marshmallows can not be altered so no to your question-squishing the marshmallows would almost be the same as cutting them into smaller pieces.  We have a Board meeting this Thursday so this  question will be discussed.  If the answer to your question changes, I will post an update.

One more question - is this tower (event 6) to be built from scratch using spaghetti and marshmallows during the competition or can parts of the tower be pre-built before the competition? Part c of competition and scoring says team will have 30 minutes to assemble, so can we assume that parts of the tower can be pre-built?