hemmi said:
So if time really slows down, would an object actually compress?
The canonical answer to this seems to be to ask back 'slow down with respect to what' and 'shrink with respect to what'? When starting to learn about SR, you likely react with puzzlement, because you think that the reference is obvious. The next step is to realize that the obvious reference you had in the sub-conscious back of your mind is not available --- this is
relativity and all (inertial) reference frames are on equal footing.
After that you likely think to pick just any frame MY and proclaim that you want to know it 'with respect to MY'. Ok then, with respect to MY, the moving frame THY shows length contraction and time dilation. But wait. The other way around it is the same: with respect to THY, MY is moving and shows the same length contraction and time dilation.

Which one is real, which one is a measurement effect. Are they both real? Are they both measurement effects?
The canonical answer is that you can't tell and that there is no point to further investigate.
A seldomly cited fact, already stated by http://en.wikipedia.org/wiki/John_Stewart_Bell"
admitting a special system of reference which is experimentally inaccessible, is consistent
with Special Relativity.
Basically this means that if
- you assume that there is one preferred frame ABS, and that
- THY and MY move with different speeds in ABS, and
- you therefore conclude they both have different real contraction and dilation (real = with respect to ABS)
it follows nevertheless that mutual comparison between THY and MY will turn out completely symmetric. The asymmetricly biased measurement rods and clocks will nicely turn out identical results like magic --- or like some math involving nothing more complicated than a square root and some care.
Even worse: it turns out that ABS joins the conspiracy of symmetry so that THY and MY will both conclude from their measurements of ABS that ABS suffers contraction and dilation.
Consequently the assumption of the absolute frame ABS leads to no new insight, except maybe the insight that it leads to no new insight, which I experienced as a very educational insight indeed. To gather more from the non-insight, see http://arxiv.org/abs/physics/0512196" .
Cheers,
Harald.