Historical Squad names should be allowed, as it gives pride in to a squad as well as historical documentation of the squad. For example my former squad 367th Dynamite Gang has a very nice background that's quite detailed and interesting to read about.
It made me learn to fly the P47D40 and P38J, I had permission from the former real members of the 367th as well as the CO of the Virtual squadron to made a website for the Aces High squad.
Banning them would be idiotic and flat out stupid when there's more history in having them then making up some virtual squadron name.