There may be some instances where someone can get away with distorting type. However, that really depends heavily on the typeface used and how mildly or severely it is distorted. In most cases distortion is indeed font murder.
On items like technical height to width factors, throw all that stuff away. You would have separate values for just about every font in existence. Most people doing sign design work should have an eye for type that has harmony and balance versus tortured and killed. It's more of a feel kind of thing -which is another argument for the importance of talent in this business.
Professional type designers spend countless hours tweaking letters and glyphs into the right sense of balance. The weight of the stroke, amount of white space, the spacing rhythm between letters are just a few of many delicate relationships at work in a well crafted font. And in just one swift move, an amateur can come along and throw all that careful balance right out the window.
We all have a need for naturally condensed and compressed typefaces. Many are readily available in font folders on CorelDRAW CDs and CDs from other applications. Frankly anyone who just grabs a normal weight font and squishes it is just being lazy. It's pretty easy to load up a naturally condensed or compressed typeface.
I attached a couple GIF images to this post to show examples of naturally compressed to ultra-compressed typefaces -along with examples of font murder trying to fit in the same amount of space.
In the "murdered" examples one can easily see how odd the characters look when squeezed to unnatural proportions. Normally the vertical stems and strokes on standard sans-serif letters are supposed to be at least slightly wider than their horizontal strokes. But you can plainly see the distortion collapses the vertical strokes to horribly thin proportions while the horizontal parts remain wide.
Stretched fonts to much wider proportions can cause similar problems. Overall the "flow" of the letter is turned into a wacked fun house mirror kind of effect -kind of like watching a CinemaScope movie in a theater with the wrong lens selected. The rhythm of type is shot and it makes discriminating designers want to shoot perpetrators of such errors.
Finally, even when one uses a naturally compressed font like URW's Bee One or the thinnest most compressed instance of Briem Akademi MM, one reaches a point of diminishing returns when using compressed type.
Too many customers fixate on sheer letter size when the real factors in legibility are the thickness of stroke and amount of white space between those strokes. Sometimes you'll get a much more legible layout by breaking copy up into multiple lines and using a normal weight font that can allow the lines of copy to breathe.