Reliable answer: try things and see how it works for you. I have seen enough variability between puppets to say any response you get here will not be 100% reliable.
Unreliable personal opinion answers: I suspect chopping segments out of the time line will mess up transitions between frames - sudden jumps with my puppets can make hair sudden fly up in the air etc. For only 3 minutes of final video of out 40 minutes total, I suspect it may be faster to just re-record the face movements from cleaned up audio files.
I *believe* if you use dynamic linking it will rescale it automatically, and I *hope* that it would avoid the jumps described above, but I never confirmed it personally.
Another approach is to record a scale transform over part of the current recordings/tracks. Just do a new recording - it creates a new layer on top. If no good, just delete it. However, again, I fear the hair and body movements might jump around in strange ways, or get weird scene transition artifacts.
So you might be correct - you may have to cut up the scene into separate scenes to avoid rough transitions. So I think you are thinking about the right sorts of questions - will dynamic linking work, will it scale correctly, but also check to see if the character jitters in strange ways at the transition. I would experiment a bit to see what happens with your puppets. Different puppets I have found react in different ways.
Another thing you could try (sorry, not at a computer to try it out right now) is you can drag a scene into another scene. I wonder if you can trim and transform a scene done in this way.
So at the end of the day I don’t think I answered any of your questions... but even if you get answers, doing quick experiments with your own puppets and content I think will be the most reliable way to proceed regardless.