Also needed to say: if I try to change the baseline all the rest of the text changes too, how can I do so only the initial character moves up? (this was also the problem with the two different typefaces being used but sorted it by making a character format for only the text however i cant make a label pharagraph style for this text as it will only want to "obey" the initial character setting.
Help highly appreciated!
Do you mean you want the initial cap to be larger, but on the same baseline? Just make the size larger on that letter.
Do it with a character style and you can add your horizontal scaling (I presume that's what you mean by squeeze, in which case you'll probably also want to add some negaitve tracking) and a different color too, if you like, all in one step. In fact, if you use a character style you can increase the size just by using horizontal and vertical scale factors and it will work with any size text anywhere in the document iin proportion to the size of the type to which it is applied. The downside to the scaling method is it doesn't adjust the leading or spacing between paragraphs so your initial cap will overlap text above or extend out the top of the frame on the first line unless you make additional spacing adjustments which cannot be scaled automatically as far as I know.
Your character style can be applied as a nested style to the first character in a paragraph style.