Can you squat with good form with a lighter weight? I'm assuming you can.
I would say the weight is too heavy if your form is simply deteriorating past a certain weight. In the past, when a squat was too hard for me, I would sometimes find myself twisting my hips, in a fashion that I think was probably similar to what you described. I never had any serious injuries or anything, but...I wouldn't recommend doing it. Don't use a weight that you can't lift with good form.