The Protect action is generally designed to help an NPC ship. However, in the spirit of teamwork, I don't see why you could not allow a ship to do a protect on a squadmate. That question has never come up in our games yet, but if it did, I think that's how I would play it.
We used "Protect any squad-mate" as a house rule for our entire last campaign, and it worked just fine. No balance issues at all, and it's really nice giving an ExpInt- or PTL-equipped squad-leader another way to protect his pilots.
Heroes of the Aturi Cluster dockingbay416.com/campaign
Protect is mission (and target) specific only.
This was mostly done because there are some exploitable edge cases related to how the AI determines its attack targets. Imagine a squad of Y-wings with an A-wing on point to draw fire - that gets really dumb if the Y-wings are also using Protect actions on the A-wing to give it a bunch of Evade tokens.
(1) Since you released HotAC, the rules changed to only use one token per attack.
(2) It's fairly tough for A-wings and Y-wings to stay together for more than one exchange like this.
(3) Finally ... A-wing. Arguably the least powerful ship in the campaign.
Bonus (4) If your group isn't pooling XP, those Y-wings are racking up assist and damage XP, while the A-wing is getting bupkis. There aren't too many players that'll be terribly happy with that. (Again, assuming non-pooled XP.)