I think I already have the answer, but I want to make sure we're in agreement. First, the two rules:

Escort: Squadrons you are engaged with cannot attack squadrons without escort unless performing a counter attack.

Snipe: You can attack squadrons at distance 2 with an anti-squadron armament of X blue dice. This attack ignores the Counter keyword.

Originally when I read Snipe, my impression was that Snipe could reach past an Escort squadron and shoot an enemy squadron at distance 2. So long as your target was entirely at distance 2, I thought you could ignore escort. However, upon re-reading Escort, it looks to me that Escort trumps Snipe. If a Snipe squadron is at distance 1 of an Escort squadron, it much shoot at the Escort squadron or another Escort within range. Seems pretty cut and dry (I feel stupid for thinking otherwise initially), but I wanted to make sure I'm reading that right.

You are correct, so long as the squads are engaged. Obstruction can prevent engagement however, so keep that in mind when you are trying to Snipe.

Agree with all points, including the lich's caveat.

Ok being mischievous here.

It is the last turn of a very close game and the Imperials want to bag some points.....

1. Sabre Squadron with Snipe (4) is engaged with an undamaged Wedge at range 1. Over at range 2 is a juicy Han Solo with only 1 damage point remaining. I assume Wedge's Escort prevents Sabre Squadron from shooting Han Solo .
2. Same situation as question 1 above but replace Han Solo with Luke who is also heavily damaged. Now both enemies have Escort so can Sabre Squadron snipe Luke and get some much needed VPs?
3. Same situation as question 2 above but Dengar is also range 1 from Wedge making him heavy . Now both enemies have Escort so can Sabre Squadron snipe Luke ?

Ok being mischievous here.

It is the last turn of a very close game and the Imperials want to bag some points.....

1. Sabre Squadron with Snipe (4) is engaged with an undamaged Wedge at range 1. Over at range 2 is a juicy Han Solo with only 1 damage point remaining. I assume Wedge's Escort prevents Sabre Squadron from shooting Han Solo .
2. Same situation as above but replace Han Solo with Luke who is also heavily damaged. Now both enemies have Escort so can Sabre Squadron snipe Luke and get some much needed VPs?

I don't see why you can't Snipe if they both has Escort. There is nothing in the rules that says you can't, but I feel you shouldn't be able to do that for some reason...

Ok being mischievous here.

It is the last turn of a very close game and the Imperials want to bag some points.....

1. Sabre Squadron with Snipe (4) is engaged with an undamaged Wedge at range 1. Over at range 2 is a juicy Han Solo with only 1 damage point remaining. I assume Wedge's Escort prevents Sabre Squadron from shooting Han Solo .
2. Same situation as question 1 above but replace Han Solo with Luke who is also heavily damaged. Now both enemies have Escort so can Sabre Squadron snipe Luke and get some much needed VPs?
3. Same situation as question 2 above but Dengar is also range 1 from Wedge making him heavy . Now both enemies have Escort so can Sabre Squadron snipe Luke ?

Heavy has no impact on Escort. This is known.

As Luke also has Escort, he's a viable (snipe) target.

Escort applies when you are engaged, so at distance 1. At distance 2 you are not engaged and therefore escort does not apply. So Wedge is your man.

Being Heavy means you can target ships, if you chose to target a squadron, then for the reason above (Luke does not have escort as he isn't engaged with you) Wedge is your man.

I agree with Amanal. Luke's escort doesn't come into play, and so Wedge's escort continues to trump snipe.

How does Lukes escort not count just becouse he is not engaged with Saber?

" Escort : Squadrons you are engaged with cannot attack squadrons that lack escort unless performing a counter attack."

Wedge has Escort and Saber is engaged with Wedge. Saber can not attack a none escort squadron. Luke still has escort, regardles of if he is engaged with Saber or not.

I agree with Amanal. Luke's escort doesn't come into play, and so Wedge's escort continues to trump snipe.

Read the exact wording of escort. You dont have to shoot an engaged escort, but one with escort keyword

I stand corrected. For some reason I thought it was restricted to engagement as well.

Ok being mischievous here.

It is the last turn of a very close game and the Imperials want to bag some points.....

1. Sabre Squadron with Snipe (4) is engaged with an undamaged Wedge at range 1. Over at range 2 is a juicy Han Solo with only 1 damage point remaining. I assume Wedge's Escort prevents Sabre Squadron from shooting Han Solo .
2. Same situation as question 1 above but replace Han Solo with Luke who is also heavily damaged. Now both enemies have Escort so can Sabre Squadron snipe Luke and get some much needed VPs?
3. Same situation as question 2 above but Dengar is also range 1 from Wedge making him heavy . Now both enemies have Escort so can Sabre Squadron snipe Luke ?

there is some disagreement on the original meaning behind "engaged at distance" 1 as it implies now to Snipe , see this post https://community.fantasyflightgames.com/topic/233418-snipe-and-engagement-rules-of-distance-1/

without hijacking this thread, i suggest hop over to the thread i pasted above and read people's different thoughts on the matter. FFG needs to FAQ what is really meant by squads engaged at distance 1 better, the original rules and FAQs left out "other squads" on many rules and just referred to ships, as all squad attacks where not beyond distance 1 at those points in time. Now that we have Snipe there needs to be an FAQ better clarifying the matter.

Well we don't need an FAQ yet, since they may have changed how Snipes works since they released the article. Now that it is on the boat however, I don't think a change was made, and maybe we will get a little insert with the pack describing how Snipe works in all contexts much like the insert flotillas got.