Stretch has three distinct senses.
- As an intransitive verb it may have either a stative sense, meaning “have physical extension”, or an eventive sense, meaning to “increase one’s own physical extension”.
- INTR. STATIVE: The Northeast Megalopolis stretches from Boston in the north to Washington in the south.
- INTR. EVENTIVE: John rose, stretched, and set about making breakfast.
Stretch is used transitively here, and was being stetched is a passive construction. That makes good sense: the continent is represented as being stretched by external geological forces as opposed to ‘stretching’ by its own efforts or volition.
Was stretching is an active construction, and in the absence of a Direct Object must have an intransitive sense. With an inanimate subject intransitive ‘stretch’ ordinarily has a the stative sense:
The North American continent stretches from the Atlantic to the Pacific.
But a stative does not usually accommodate the progressive construction was stretching. Moreover, stative stretch requires that the extension be defined, usually with preposition phrases from X to Y; that is absent here.
That leaves stretch in an eventive sense. That sense is very unusual with an inanimate subject: we say that a person or cat ‘stretches’ (intransitive) upon waking up, but to say that a continent ‘was stretching’ falls very odd on the ear.
I think Was being stretched, meaning “was being caused to increase in physical extension”, is the only likely construction here.