We study a bulk fermionic dipolar molecular gas in the quantum degenerate regime confined in a two-dimensional geometry. Using two rotational states of the molecules, we encode a spin 1/2 degree of freedom. To describe the many-body spin dynamics of the molecules, we derive a long-range interacting XXZ model valid in the regime where motional degrees of freedom are frozen. Because of the spatially extended nature of the harmonic oscillator modes, the interactions in the spin model are very long ranged, and the system behaves close to the collective limit, resulting in robust dynamics and generation of entanglement in the form of spin squeezing even at finite temperature and in the presence of dephasing and chemical reactions. We discuss how the internal state structure can be exploited to realize time reversal and enhanced metrological sensing protocols.