my stored contacts that have the country code prepended doNOT get matched to existing calling contacts
If you want a quick answer (two in reality) here is what I would do: 

1) Go to Settings > Accounts > remove the Google account > add it back. 
   I tried it once and it worked... 
2) Go to Gmail on a desktop > Go to Settings (the gear icon in the top right) > Under General, go to 'Phone Numbers' and select your default country code from the dropdown list. 
   This way your device should automatically recognize incoming call from your country...  

I'm not sure if one of these is the solution to your issue, but I know that many people solved the same issue using them. Just try and tell me if they work. If not, we'll look for another solution ;)