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Hard to say whether the shock is actually broken, or perhaps just stretched out a bit. I suppose it can stretch out a bit after the prop has “bumped” a few things. I am also wondering if water in the gearcase gets trapped inside that shock making the issue worse. Someday I’m gonna take one of these things apart to get a better idea of what it is all about. Compressing the driveshaft shock back down seems like a reasonable solution though, if it stretches again then I would replace it. Plenty of guys just weld the two pieces of the driveshaft together after compressing it, which seems like a fine solution as well. But, you have to make sure the two halves are “true” before welding to avoid driveshaft misalignment.
Finally, this whole device seems like “over engineering” to me. After all, isn’t the shear pin there to protect these parts?