Hi Cowabanga,
I'm new to GameStudio, so the following might be something you've already explored, but perhaps ent_bonescale( ENTITY*,STRING* name,VECTOR* scale) and ent_bonereset() might help? Although I haven't tried either, ent_bonescale may allow you to dynamically scale an entity's bone (pointed to by STRING*) in one or more dimensions, along with child bones and attached vertices.