In a food processor, combine the lemongrass, shallots, garlic and chiles and process to a paste. In a large enameled cast-iron casserole or Dutch oven, heat the oil. Add the paste and cook over moderate heat, stirring frequently, until fragrant and just beginning to brown, about 5 minutes. Add the rabbit, fish sauce and water and bring to a boil. Simmer over low heat, partially covered, until the rabbit is tender, about 1 hour.
Transfer the rabbit to a plate and add the butternut squash to the casserole. Cook over moderate heat until the squash is tender but not mushy, about 15 minutes. Return the rabbit to the pot and stir in the lime juice, lime leaves, scallions, dill and basil. Cook just until the rabbit is heated through. Serve with rice.