Spatially Squeezed Surround Audio Coding (S3AC) has been previously proposed as an efficient approach to multi-channel spatial audio coding with stereo/mono backward compatibility. This paper presents a binaural reproduction scheme that exploits source localisation information in the S3AC squeezed soundfield or S3AC cues to simulate surround audio scene over headphones. The approach utilises interpolated HRTFs to bring the S3AC advantages of accurate, localised sound sources to stereo headphone systems. The integration of the HRTF approach to reproduction also exploits human localisation ability to reduce interpolation complexity. Subjective experiments demonstrate that accurate localisation is achieved from binaural, interpolated HRTF playback when compared to multi-channel playback.