No. Only the sprite drawing is changed - the entity mechanics remain the same. You'll notice this also has an adverse affect on the appearance of things like jump height and walk speed if you --++ far enough in either direction.
Through experimenting, I have found --++ 10% won't be any problem during regular game play, but any more than that is best reserved for special moments.
Incidentally, you can modify collision proprieties through script and then match them to the scaling yourself, but since you are directly setting coordinates you have to manually handle a huge chunk of PITA math the engine normally takes care of for you. Still, the option is there if you want to make mechanically inclusive entity scaling.
DC