The compatibility of cavity-generated spin-squeezed atomic states with atom-interferometric sensors that require freely falling atoms is demonstrated. An ensemble of $500,000$ spin-squeezed atoms in a high-finesse optical cavity with near-uniform atom-cavity coupling is prepared, released into free space, recaptured in the cavity, and probed. Up to $sim$10 dB of metrologically-relevant squeezing is retrieved for 700 microsecond free-fall times, and decaying levels of squeezing are realized for up to 3 millisecond free-fall times. The degradation of squeezing results from loss of atom-cavity coupling homogeneity between the initial squeezed state generation and final collective state read-out. A theoretical model is developed to quantify this degradation and this model is experimentally validated.
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