“However, when someone decides not to cover her hair when she is married, she is b’shitah saying to the world “I do not cover my hair and that is OK”. She doesn’t acknowledge that she is doing wrong.”
Many people do things wrong, openly and knowingly, but still do it. Don’t take that as thinking its correct anymore than the tax evader who is still openly accepted by his shul really thinks his theft is ok.
As to the shalom bayis issues – I thought certain things were more kabbalistic in nature. No one is going to convince me that if a man sees a woman with a sleeve that is 1/4″ too short, he is going to stray. Why we have the boundaries we do is simple halacha, but you aren’t talking about observant women wearing bikinis – you are talking a matter of inches. If a man says he was tempted by the 1/4″, I wouldn’t believe him, especially because general society exposes so much more than we do.