I want to use masquerade in a custom module

// Get the link token.
// You can move this further down if you like and add an optional value parameter to it.
$token = drupal_get_token();

// Find the user you want.
// Don't reload the user unless you have to--in many cases, you may already have access to them as an object.
$account = user_load(4); // whatever user you want.

// Generate the title of the link.
$link_text = t('Masquerade as @username', array('@username' => $account->name));

// Generates a "masquerade as <username>" link.
$link = l($link_text, 'masquerade/switch/' . $account->uid, array(
  'query' => array(
    'token' => $token
  ),
));

Shameless plug, as well, but I've already addressed this problem with http://dgo.to/masquerade_extras if you use the Views integration.

Unless there's additional feedback or you have other questions, I think this can be marked as fixed.

I should have clarified.
The problem of generating a custom link is solved with masquerade_views by generating lists from contextual arguments.

Alternatively, if you need a one-off solution, the above code will work.
Load the user you want in a custom module, and attach the link to the output you want, or in your theme.

Oops, I missed a parameter on drupal_get_token().
You need to tell it the path you want to hit (i.e. it should be the same as the "masquerade/switch/###" where ### is the UID you want.

Example:

$token = drupal_get_token('masquerade/switch/272817');