Im not real clear on what you mean by squished. Moving a camera is either smooth, or jittery.
You have most of the basic formula there, but the dt is a bit concerning.
lerp(scrollx,target.x,speed*dt)
lerp(scrolly,target.y,speed*dt)
Where speed is in pixels per second.
Now if you don't like the easing, you might try one of the other expressions like cosp(), but keep in mind you would have to change the speed.