It's an odd one as Squires can be soooooooo hit and miss. the last guitar i bought was a Squire tele custom ii (with P90's instead of hum buckers) and love it. I was on a pretty tight budget but out of everything i played in the price range (£100 - £400) the squire tele played and sounded the best. However, the squire strats i played were god awful, the jaguars were hit and miss (they either played really well but sounded crap of vice versa) and some of the other teles were pretty ropey. A friend of mine has several older squire jags (5 i can think of but he's always buying and selling them) and he loves them but he's definitely upgraded all the pickups and on one or two of them he put a proper fender necks on, but even then the pickups were only about £100 or so for each guitar and at least one of the fender necks was a bargain on evilbay.
For $500 though, unless the exchange rate is mad and strats cost way more down under, i'd be more tempted just to save a bit more and get a proper fender strat.