Remember the parallax problem will be worse at higher magnifications. With a 3-9X it probably will not be an issue at the lower end of the range. If you get a larger scope like 4-16 or 6-18 or higher it will be a problem if you crank them up.
Parallax is simply the amount of error a scope has at a certain distance. It does not mean the scope is actually off. If you have proper form and line up on the scope the same way everytime it will not be an issue. An easy way to check it is to put the rifle in a rest and move your head around while looking at a target. If it is not parallax free at that yardage the cross hairs will move around on the target. The amount they move is the amount your shot could be off. If the cross hairs do not move (welded to the target) then the scope is parallax free at that distance.
I would say if you are going to squirrel hunt a nice 3-9 or even a 2-7 would work nice. But if you want to target shoot or varmint hunt a nice higher powered scope with an adjustable objective would work. You can get a decent varmint scope for around 150 bucks if you look around. They won't have optics as good as a scope for twice the money, but they should function and work well.
I would stay away from the BSA sweet 17 scopes that are made for this gun. I don't have a big problem with BSA, I have owned a few that worked very well. However they were all the higher end models. Very comparable to a Aetec or 44mag in my opinion. I have talked to guys that have the Sweet 17's and they like them but I looked at them and they are based on the lower priced models in BSA's line up. The optics were not that great. Certainly not what a 17HMR deserves. I wish they would have based them on the Platinum, Catseye, or Panther scopes and charged a bit more. These all have a bit better optics than the cheaper scopes. Truth be known you don't need the bullet compensator with this round any way. It shoots pretty flat out to the ranges it is effective.
You should be able to get a really nice 3-9 hunting scope for 150 though. Like said a 3.5-10 might be nice as well. You could also get a lower power scope with AO and keep the power down and the AO set at 50 yards or so for squirrel hunting and it should work ok.
I have a high powered AO scope on mine; a 6.5-20x44. I will be honest, I had to spend quite a bit more than I wanted to find one I was happy with. I ended up with a cabela's Alaskan Guide brand scope and it cost me around 400 bucks with the scope and rings. I tried a few in the 150 to 200 range and they were ok, but didn't have the resolution I was looking for at the higher powers at 100 yards. However many have scopes in the 100-200 dollar range at rimfire central and are very happy with them.
If you are on a budget I would suggest the bushnell Trophy scopes as well. I have a 1.75-4 on my slug gun and it is pretty nice for 100 bucks. I have a buddy that has the same scope in 3-9 and he likes it too. There are others that are simular as well. Just remember the more power and options the scope has the more money it should cost. Good optics cost money, period! If you see a scope that you think should cost 3 or 4 hundred dollars for 100 bucks there is most likely a reason. They are cutting corners somewhere. Either the glass and coatings are poor, or the quality control is low. Getting a low dollar varmint scope is sort of like a crap shoot. You might get lucky, then again you might not. On the other hand $150 for a lower powered hunting scope you almost can't go wrong. Pretty much all of them in that price range will be pretty good scopes.
Also remember some companies will preset a parallax for you at the factory. If you want it set at 50 or 75 yards some will do it for you. There is even a way you can do it yourself.
Check out this link.
rimfirecentral
They have forums specifically for the 17 HMR and scopes here. Tons of info and you can see what others are using. This topic has been discussed at length several times.
Good luck,
Paul