I never liked the unrealistic concept in PF that you can't end movement in someone else's square. Like, when there is a crowd gathered, is everyone standing 5 feet away from the nearest person?
I am considering a houserule where if an ally consents, you can end movement in their square, but you are both considered squeezing. You can also squeeze 3 people into a square, but the squeezing penalties increase to -6 AC and -6 to-hit, and a maximum of four people can squeeze into the same square at -8 AC and -8 to-hit.
Does that make sense? Does it break anything? Should I penalize Reflex saves as well?
Considering anything which can deliver reflex saves is probably salivating over the prospects of catching 2-4 people in a single square already, penalising reflex saves seems unnecessary.
It seems reasonable, but you should probably also allow some combat maneuvers used by large+ creatures to target all the creatures in a square. Bull rush for example.