Answers

Wood is the best attic stairs.

We have a client that recently dealt with a similar situation, but it was a racoon. They installed a one-way door, made from galvanized mesh, over the hole. Once the varment was out, the clean-up and repairs could be made. There are liquids that be applied that will keep them away once everything is sealed up.

here is a link to a good article on How to get squirrels out of an attic.

http://www.aaanimalcontrol.com/professional-trapper/squirrels-attic.htm

On the squirrel removal, best to call a trapper or get a trap. 

That area agains the home can be covered with some heavy guage counter flashing and sealed up prior to that with some fast setting mortar.