I don't think that we can use the compression of space time to explain what we are seeing. First, Photons are fundamentally different from objects. Photons are Bosons, carriers of the electromagnetic force. 'Objects' as we commonly use the term are composed of Leptons and quarks (electrons, protons, and neutrons). They are different, See: http://en.wikipedia.org/wiki/Standard_Model . Plus the way that most people think about photons is wrong, it's not like a stream of little balls, it's a stream of wave packets. And for situations like this, where we have light traversing a boundary, its much easier (and more accurate) to just think of it as a wave.
So on the red-shifting, if I'm reading you correctly you are saying that over a 20:1 (20s inside, 1s outside) boundary, there won't be much red-shifting. Unfortunately, that is not the case. To simplify, let's think of it as a 10:1 boundary. Say you have a bucket of 10 oranges, and you throw them out of your speed bubble. If you throw them at 1 per second (1Hz) they will emerge from the outside at 10 in 1 second (10 Hz) that's an order of magnitude jump in frequency. Say we have a simple light source, a candle, one component of the light has a wavelength of 666nm, or a frequency of 450THz (4.5*10^14 Hz). Coming out of the bubble, the frequency will be increased by the same factor as the oranges, so 450THz becomes 4500THz. This is 67nm, or in the near UV range. Going the other way, the same red light on the outside would become 45THz, or 6700nm, or in the mid IR range. That's some significant red-shifting.
So, if we accurately treat this as a hard geometric boundary, there should be loads of red-shifting, and some serious pancaking/spagetification as objects move through the boundary. But, these are not the affects that we have seen, so some other system must be at work. Thus my theory about the boundary treating 'objects' differently.