Interestingly enough, I've found a work around. I archive the application, distribute it, choose to create an IPA, add IPA to iTunes, and sync to the iPad. Then, it works again. That's a little bit of a hassle, but it works.
BTW, it seems like iSqueak is pretty dead in the water (i.e., no development in over a year). That's a shame. While I do have to optimize the Squeak interface for speed, it is peppy enough on an iPad 2 for my purposes.
Cheers,
Jeff