I squatted (not coached - it was the one moment of my labour where I felt in tune with my body and just did the right thing). DD was born with no tearing, despite a nuchal hand, so I'm a fan! Mum birthed 6 babies in 6 different positions (well, one was an emergency C-sec, so not much choice there!), and always swore she "got it right" on the last birth, which was hands and knees... or more like elbows and knees, she was supporting her arms on a beanbag.
Honestly, if you squat to give birth you'll probably be on a bed, not poised over a 40-foot drop to spiked concrete - so it doesn't matter that much if your MW doesn't catch the baby. DH caught DD, standing behind me - at least, he caught her head and kind of "missed" her body, so it fell on the bed - but it was such a short drop it didn't really matter, and the bed was soft. DD hasn't suffered any ill effects that I know of. :p You could even put a cushion or towel down if you wanted to make it extra soft - something you don't mind getting dirty. Your MW will probably find that catching a baby in that position isn't actually that hard, but if neither she nor you nor your DP (or other birth attendants, or whatever!) manage, it likely won't be a big deal. In short: squatting's not the only good way to give birth, but if you want to do it you should do it. It really does increase the available "space" - isn't it by something like 30% compared to the lithotomy position? And a squat or semi-squat has a lot of precedence in a wide variety of cultures. So maybe your MW should just get over it! :)
ETA: I squatted on a hospital bed with the front end put right up, like 90 degrees... so I could cling to that for balance, and bury my face in the mattress when applicable. :p Having something to hold onto was definitely a plus, as my balance isn't great and I'm not used to squatting for extended periods of time. If you do a waterbirth, you can probably hold on to the edge of the tub.