The effect of time dilation comes directly from the central postulates of special relativity, which are that a) the speed of light is the same in all inertial frames of reference, and (b) that the laws of physics are the same in all inertial frames of reference.
Consider an observer inside a railway car. The height to the mirror ceiling is $L$, and he fires a laser to see it go and return. From the definition of velocity, he sees that
$$ v = \frac{dx}{dt} \quad = c = \frac{2L}{\Delta \tau},$$
where $\tau$ is the time he measures.

In the frame of reference of someone watching him pass by at speed $v$ (see the picture from Wiki), they similarly measure that
$$ c = \frac{2\sqrt{L^2 + \frac{1}{4}v^2\Delta t^2}}{\Delta t}, $$
where $\Delta t$ the time span in the ground frame. Combining these, you can show time dilation, as given by
$$ \Delta \tau = \Delta t\sqrt{1-\left(\frac{v}{c}\right)^2}. $$
Since we know of the speed limit $ v < c $, the root term is always less than 1, and thus the moving observer measures a smaller time.
This is a physical result. The observers measure different time spans for the light clock, and they are both equally valid in thinking their measured time is "correct". So the effect of time dilation arises directly from the assumptions of special relativity, not from the doppler effect.
For the doppler effect, a difference in wavelength can be given by
$$\frac{\Delta \lambda}{\lambda} = \frac{v}{c}.$$
The speed is related to the change in wavelength, so the fact that the object is moving relative to the observer means that the observer can only see a change in color, not in time. After all, if the source being observed is continually emitting light, then light will constantly arrive at the observer. So the observer would not detect a change in the arrival time of the light.
However, your reasoning could be applied to a car blinker accelerating away from us relativistically. At each blink, the clock would be farther away, and each pulse would take longer to reach us. However, this would still be the result of causality, and the nature of light, rather than the doppler effect itself. Also, a person in the relativistically-moving car would still measure a dilated time relative to us as observers.