This has been answered before. If you transforn a smart object layer it is indeed transforms like a raster layer for Photoshop first renders pixels the smart object then transform the rendeded image. If you want the change the size of the embedded object and keep the quality high you need to update the smart object itself. If the embeded object has vector and text layers then using Image Size on the smart object will do the trick. In the layers palette double click on the layer's little smart object icon. Photoshop will onen the embeded smart object in Photoshop for you to work on. Use Images size and increase it size to the size you need it to be in the document your working on. Then use menu File>Save and then menu File>Close. During the "Save" Photoshop will update the embedded smart object in your document to reflect the size change. The "Close" will close the temp work document opened for you to work on.