This won't quite cut it. The stretching needs to occur on the rotated image, which I believe is impossible to do in vanilla C2. One way to do it would be to use a paster object (plugin by R0J0hound).
Here, I put the galaxy sprite in a container with a paster. Every frame I refresh the paster sprite by first re-positioning and expanding the drawable area back to the original state, paste the galaxy with a newly rotated state, and then stretch the paster object by an arbitrary factor (< 1 to retract, >1 to expand). Then I position the paster in a manner that it seems to share the sprite origin. Seems to work pretty well !