Answer

I read through the paper quickly. It is well written and clear, and nevertheless I do not agree with it (I am a complete Litvak). In my view, you did not really provide a solution to the problems—and no wonder, since they have no solution. The expression “contraction not to be understood literally” is nonsense. I will try to explain briefly:
1. If one says that the Holy One, blessed be He, constitutes the world at every moment and creates it at every moment, that can also be accepted by those who hold that the contraction is literal. There is still something here that was created and that exists, except that this is done at every moment. So what? It exists fully in every respect.
2. I did not see that you answered the question: who is it that experiences the contraction if we do not exist? You only return to the contradiction between our experience that we exist and the theoretical claim that we do not exist. But the most basic question is the first one—who is it that experiences our illusory existence if he himself is merely an illusion?
Admittedly, according to your approach—that we do exist, except that we are created at every moment—the question of course falls away, but it falls away because that is a formulation of literal contraction (as I explained above).
3. In addition, you write that a spiritual thing does not take up space, so what was the problem to begin with? The Holy One, blessed be He, is present everywhere, even in our ordinary space. He certainly takes up space, and therefore He had to contract Himself (as you quoted from Rabbi Jonathan Eybeschütz, that from the Ari it is apparent that the contraction was literal).
4. Your explanation that the contraction is our ability to experience ourselves sounds to me like empty words without content. What exactly does this mean? Are we here or not? And if we are—then is there a need for contraction or not? If not—then who is the person who experiences his own existence?
In other words: if that is the situation, why is there any need to arrive at the idea that we do not exist continuously but are created anew at every moment? After all, even if we fully existed, that would not take up any of the space of the Holy One, blessed be He, since He is spiritual.
All the best, and good luck,