Compresses and massage aren't in themselves bad for the tissue (unless it hurts of course,) the problem is the discomfort, distraction, and self-consciousness that many (most?) women experience when that kind of clinical attention is imposed on them. But if you love the feel of a compress or massage and it comforts and relaxes you, by all means go for it!
Position can make a difference a few different ways: being vertical puts downward pressure on the tissues which signals to the brain that certain hormones should be released that (among other things) make the tissue stretchy, it opens up the pelvis so that pushing doesn't need to be so hard, and gravity brings blood flow to the tissues, also helping them stretch. Squatting might be a bit too intense for some women if they're not used to it, and especially if they haven't been squatting all labor and is adopted just for pushing it might be too quick of a manual stretch for the tissues. Kneeling worked best for me because I was could maintain it for a long time so didn't tense up from tired muscles.
I've had one water birth (out of four) and I did like it for the privacy it afforded, but opted to do it on dry land for the next two (getting my privacy in other ways, namely by being alone. ;)) Think about what water does to your skin when you take a bath -- it (over time) washes away the protective oils and the skin becomes water-logged. Also, any lubricating fluids from your vagina will be washed away. (Think about what it's like to have sex in water.) On the other hand, water is relaxing.
The most important thing, whether you have scar tissue or not, is to do everything you can to let the hormones work maximally. Privacy, comfort, love, relaxation, and letting your body guide you in pushing. Attempting to avoid pushing when your body is trying to is a really bad idea, it will tense you up, confuse your body, and interfere with that hormone release.