We study the strong coupling between photons and atoms that can be achieved in an optical nanofiber geometry when the interaction is dispersive. While the Purcell enhancement factor for spontaneous emission into the guided mode does not reach the strong-coupling regime for individual atoms, one can obtain high cooperativity for ensembles of a few thousand atoms due to the tight confinement of the guided modes and constructive interference over the entire chain of trapped atoms. We calculate the dyadic Greens function, which determines the scattering of light by atoms in the presence of the fiber, and thus the phase shift and polarization rotation induced on the guided light by the trapped atoms. The Greens function is related to a full Heisenberg-Langevin treatment of the dispersive response of the quantized field to tensor polarizable atoms. We apply our formalism to quantum nondemolition (QND) measurement of the atoms via polarimetry. We study shot-noise-limited detection of atom number for atoms in a completely mixed spin state and the squeezing of projection noise for atoms in clock states. Compared with squeezing of atomic ensembles in free space, we capitalize on unique features that arise in the nanofiber geometry including anisotropy of both the intensity and polarization of the guided modes. We use a first principles stochastic master equation to model the squeezing as function of time in the presence of decoherence due to optical pumping. We find a peak metrological squeezing of ~5 dB is achievable with current technology for ~2500 atoms trapped 180 nm from the surface of a nanofiber with radius a=225 nm.
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