The stress-assisted Kosterlitz- Thouless (K-T) transition was proposed by Khantha, Pope and Vitek [1] as a possible mechanism for the abrupt transition from brittle to ductile behavior of single crystals as a function of temperature. We argue that in a two-dimensional crystal under elevated temperature and applied shear stress, the microscopic mechanism of the stressassisted K- T transition is the nucleation of dislocation dipole pairs with a preferred Burgers vector orientation. This defect population gives rise to an anisotropic hexatic phase with quasi-long range order along one axis and short-range order along the orthogonal axis. The laboratory signature of such a phase is scattering peaks that are “streaked,” i.e. strongly broadened along a single direction. We discuss experimental data for an analogous twodimensional system which displays order of this type. Potential implications for the brittleductile transition in three dimensions are outlined.