I use squirrel mail with FC3.
I simply edited the following lines in /etc/squirrelmail/config.php :
$useSendmail = true;
$smtpServerAddress = 'localhost';
$smtpPort = 25;
$sendmail_path = '/usr/sbin/sendmail';
NOTE: /usr/sbin/sendmail is linked to the postfix sendmail command. Using the FC3 distro, this link should be pointing to /etc/alternatives/mta; which is then linked to /usr/sbin/sendmail.postfix. If its not, run "system-switch-mail" and select postfix.