a few thoughts based on my experiences;
1) leg raises on a machine give me more knee problems than squatting ever has;
2) if you are squatting for powerlifting, you should not go more than one inch below parallel and your shins should remain fairly vertical (narrow stance guys will have their shins go towards the knees some) (using this form should not cause any knee discomfort; going lower than this will not hurt the knees, but could strain the hips; but more importantly, why would you do it--the rules only require going to just below parallel);
3) if you are front squatting or using more of an OL style squat where your knees do go forward, stopping at or just above parallel will cause much more stress on your knees than going all the way into the hole.
As to point 3, this may seem counter-intuitive, but I believe the science bears it out. For instance, if you are doing power cleans and you drop down about 4 inches to catch the bar, this should produce little strain on the knees. If you use too much weight on a power clean and are forced to drop to just above parallel, you should ride it all the way down and just do a full clean. Stopping at just above parallel is what some call "no man's land" and is the point at which the shearing forces are greatest on the knees; you do not want to spend much time at that point.
For added support read about it at:
http://www.olympus.net/personal/cablebar/NML.htm