There's really two ways of doing squash and stretch (or squetch as people in the know say
); using parametric deformers or scaling bones.
The parametric method can give amazingly cartoony results: you can mix Bend, Squash, FFD's (basically anything you find in the Create > Space Warp > Modifier-Based and Geometric Deformable). The problem is that you don't have a lot of control over how the vertices are effected by them because you can't assign or paint a vertex influence, the FFD object has a Falloff setting which can sometimes be all you need but other times it's not enough.
Also, if you use this method it pretty much excludes the option of controlling areas of the face (such as the eyebrows, lips, nose, etc.) using on-face spline controls because the Parametric deformers deform the vertices but leave the pivot unchanged. That means that if you bend the head back and select one of the controls, the pivot will be in the original location and so moving the control up in the Z axis will actually result in moving areas of the mesh back in the Y axis (assuming it controls some of the meshes vertices of course).
So to get round this problem, you need to create something like a Jason Osipa control panel.
The other method is the one I prefer, scaling Bones, you don't get as much flexibility as the Parametric method, but you get a lot more control and you can use on-face spline controls (which I prefer to use). It's very easy to set up; you have your head bone but you have two child bones which should be positioned in the center of the head, below the eyes but above the tip of the nose. Then instead of skinning to the head, you skin the upper portion of the head to one of the bones and the lower half to the other. Then you can scale the bones to get your cartoony results!
Isn't all of this simple?!
Anyway, I attached a zip containing an example of both. the parametricDformation file uses a sphere to drive the attributes of parametric deformers which drive a lattice which deformers the mesh (you could use a vertex selection in this case, but the problem I mentioned comes when you want to add another deformer on, say, the lower jaw), I also added some spline shapes representing the eyebrow so you could understand the other problem I mentioned. The boneDeformation file contains control to deform the upper and lower head with rotation and scale, you could add translation but I didn't just because it was a quick test - the skinning needs to be improved a lot.
Hopefully this clears up some issues you had and gives you some good ideas of how to get started.
-Harry
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