It has always bothered me that although time dilation has been verified that length contraction remains elusive. Why is that? If we consider the fact that in our local frame of reference we will always record the speed of light to be c in a vacuum. In other media we have the data available to correct for changes in light speed. So we should always be able to tell locally how far light has traveled and how long it took.

This in fact may not be possible at all. Without knowing the exact properties of the intervening media and the gravitational effects we make assumptions as to the distance traveled. We can account for the gravitational time dilation due to shifts in the wavelength of particles but this tells us nothing about how far the distance traveled was. If spacetime were compressed in the spatial direction light would always give us the answer we expect and not the spatial distribution of the remote frame where the light originated. We can make no determination about the spatial dimensions of any frame outside of the local frame we occupy.