For all practical purposes, there is no such thing as a "Purple Squirrel"; not in nature and not in the job market. It is a metaphor used by recruiters to identify the unrealistic expectations of a client company.
The happy exception is when a perfect candidate, with exactly the right qualifications and experience, is actually found for a job opening. That person would then be referred to as a "Purple Squirrel".
But every human being is flawed, and even if the candidate has all the requirements, i.e. IS a Purple Squirrel, they might not even get a phone screening.
Thus, even one recruiter's Purple Squirrel can be "just another disqualified candidate" to the client company.
In particular, recruiters or HR people use the term when they are talking to other recruiters or someone familiar with the recruiting industry.
The term has been in use for at least 10 years (there once was a magazine called "Purple Squirrel"). The term is in common, but not widespread use by recruiters as of 2009.
Such are the realities of the early twenty-first century job market. As more workers become unemployed, companies become more selective, and finding work becomes more difficult to the point where recruiters are expected to find "Purple Squirrels" for job openings, and companies move ever more slowly to fill positions.
Oy, I am so tired of dealing with that company. I've found Purple Squirrels for them twice and they still haven't filled the job.