  We analyze a model for spin squeezing based on the so-called counter-twisting
Hamiltonian, including the effects of dissipation and finite system size. We
discuss the conditions under which the Heisenberg limit, i.e. phase sensitivity
$\propto 1/N$, can be achieved. A specific implementation of this model based
on atom-atom interactions via quantized photon exchange is presented in detail.
The resulting excitation corresponds to the creation of spin-flipped atomic
pairs and can be used for fast generation of entangled atomic ensembles, spin
squeezing and apllications in quantum information processing. The conditions
for achieving strong spin squeezing with this mechanism are also analyzed.
