From what I've read on magnetism as a result of incorporating special relativity into electrostatics, I have got the impression that:
a) If you have two parallel and (for simplicity) infinite streams of moving particles with equal velocity, in the particles' frame they observe each other to be stationary. The Coulomb force on any one particle is given by $qE$ where E is resultant field.
b) Viewing the same situation from a laboratory reference frame, we observe a length contraction for both streams. Then the particles appear closer to each other, so the density appears to us to be more than what the particle observes. So we predict a larger Coulomb force of repulsion than the actual force that the particle feels, and introduce the magnetic field as a 'correction'. For a section of aforementioned infinite streams of length x and separation r: $$ F_{net} = (F_{coul})_{frame} = (F_{coul})_{obs} + F_b \implies F_b = (F_{coul})_{frame} - (F_{coul})_{obs} $$ $$ F_b = \frac{1}{2\pi\epsilon_0r}\lambda_{frame}^2x - \frac{1}{2\pi\epsilon_0r}\lambda_{obs}^2x $$ Now by apparent length contraction of the particle stream in the lab frame: $\lambda_{frame} = \lambda_{obs}\sqrt{1 - v^2/c^2} $ $$ \implies F_b = -\frac{1}{2\pi\epsilon_0r}\lambda_{obs}^2x(1-\frac{c^2 - v^2}{c^2}) = -\frac{\lambda_{obs}^2v^2x}{2\pi\epsilon_0rc^2} = -\frac{i^2x}{2\pi\epsilon_0rc^2} =-\mu_0\frac{i^2x}{2\pi r} $$ I.e. the force is attractive in nature and this agrees with $ c^2 = \frac{1}{\mu_0\epsilon_0} $ and what was predicted by Biot-Savart's law.
The question arises what happens if there is no stream but just, say, two parallel particles moving with the same velocity? There is no question of any charge density observed or otherwise. But in the particle's frame of reference there is just the Coulomb force, and in our frame of reference there is also the Coulomb force, which should not change as there is no length contraction observed. What am I getting wrong here? Surely one moving charged particle generates a magnetic field (which I was told is true in any frame where the charge moves), and the field would act on the parallel particle? How do we explain this with special relativity?