OK, I'm only looking at a picture, but the breaks look like the are caused by over exstension, not over compression. Am I missing something?

Regardless, that does kind of suck. I haven't broken a shock yet, but I always carry a spare for front and back.

As a side note, I do think that Rancho shocks are structurally better built than the Bilstiens; atleast from the looks of things, but the Bilstiens are far superior in valving and so ride and handling. After having Bilstiens I won't go back to anything else and will just hope that I never have the problems you are having. There just isn't anything else out there I've seen than can come anywhere near the performance, and the breakage problem does kind of seem isolated for some reason.

Does SLR have anything to say maybe about the lift and shock combination?

For those deciding to not buy the Bilstiens because of one person's experience, I would say that's a pretty sad way to base your decision. That's like not buying your Xterra because one person had a bad differential. Look around and you will see way more people that are happy with the Bilstiens. It's unfortunate that XOC is having this problem, but in the long run everyone (including Bilstien) will benefit from all the different experiences that folks have.