Half-absurdity 1 (a glorious consequence of Einstein's 1905 false light postulate): As judged from the rivet's frame, the hole is length-contracted so the end of the rivet hits the bottom of the hole before the head of the rivet hits the wall and the bug is squashed.
Half-absurdity 2 (a glorious consequence of Einstein's 1905 false light postulate): As judged from the bug's frame, the rivet is length-contracted so the end of the rivet DOES NOT hit the bottom of the hole and the bug is NOT squashed.
So half-absurdity 1 contradicts half-absurdity 2, and both half-absurdities are consequences of Einstein's 1905 false light postulate! Down with Divine Albert? No! Einsteinians have found a simple solution to the problem. In the half-absurdity 2 scenario, the 0.8 cm rivet becomes, for a while, 1 cm long (or as long as necessary) without any destruction! And the bug is squashed! No contradiction between half-absudity 1 and half-absurdity 2! Divine Einstein! Yes we all believe in relativity, relativity, relativity!
Yet the required elongation beyond the at-rest length does not save special relativity. As judged from the bug's frame, if the back end of the rivet suddenly stops while the rest of the shank continues to move forward at great speed, and if the rivet is made of relatively soft material, then the only possible result is breaking of the shank BEFORE the bug is reached. This is fatal for special relativity because "breaking of the shank BEFORE the bug is reached" is impossible as judged from the rivet's frame (half-absurdity 1 scenario).