Doc-
I prefer a magnifying scope for small game hunting.
I use a Leupold M8 2 X 20 EER handgun scope on mine, and have been very happy with it. I think anything much higher than a 2X would make shooting offhand pretty difficult.
I have an UltraDot, and use that for plinking. Here's my beef w/red dots for hunting small game- the dot can obscure too much target- like the squirrel's head.
Imagine a dot that was advertised as covering 4 MOA (common specification). At 25 yards (a realistic squirrel range), that dot is covering a 1-inch circle. Aiming is imprecise in such a case, IMHO. Many shooters report measuring the "size" of their red dots, only to find out that they cover a lot more target at 100 yards than was advertised.
Compare this to a 2X scope w/a duplex reticle- you have the 2X magnification, and your crosshairs cover much less real estate than that dot... more precise.
There are Bullseye shooters that can do incredible things with red dots, but I just prefer a magnifying scope for small game.
Good luck!