OK, I'm working on about 3 hours of sleep in the last two days (long story) so my brain's working even less properly than usual... But, there's some mention of the problem here.
"Another important detail for a good squirrel rifle that is commonly overlooked is the sight height above the bore center line. These days everyone wants a scope on his or her gun. About the lowest you can mount a scope is 1 3/8 inches above the bore. And 2" inches above the bore is not uncommon. With a scope and almost any cartridge you are going to shoot low at short ranges of less than about 25 yards. The higher your sights are above the bore the worse this problem becomes. If you practice and become good with old fashioned, low mounted open sights you can eliminate this second problem and be right where you need to be from 15 yards out to over 75 yards."Also in here,
http://www.scribd.com/doc/3917712/Us-Army-Fm-322-9-239-Rifle-Marksmanship-m16a1-m16a23-Essentially your LOS (line of sight) is higher than the LOF (line of fire, or rifle bore). If you zero in at 50 yards, your making two straight lines (LOS & LOF) intersect at that distance. They won't match at any other distance, so the further apart LOS, and LOF are, the more you will miss your squirrel by if he's to close, or to far off the 50 yard mark. It effects ALL rifles, but the higher the scope is off the barrel, the more trouble you'll have with accuracy without making up a range card and calculating each shot from that rifle.
That's enough thinking for me till I get some sleep!