as far as I know windows are not subject to scale, thus even though it's in a container, if the container is not subject to scale then an object within it won't be either
Strangely the manual, in the section Script language reference, under the item Window object and also Entity container object, in the section Attributes of either, mentions Scalable with Movable, Rotatable and Colorable.
1. If you create an entity with create object, then it will be created at the top of the z-order for all scene based nodes,
I have created a sprite entity and a free entities directly in SceneEdit.
Moving them with the mouse on the screen the sprite was hidden depending on the location of the hotspots of some objects on the scene.
This happens in any position I put the sprite in the node window.
I have not, however, tried to create the object at runtime
you may be able to create an algorithm that reads the scene scale at a given Y point then applies a scale to the entity itself.
I'm not quite sure but I seem to have tried to change the scale at runtime (without a real algorithm) and I seem to remember that it did not work (with window container)
If this does not work, then another option would be to create a number of differently scales frames within a WME sprite. All you do then is have a persistent routine which checks the position of the Y of the object on the screen and selects the appropriate frame.
In this case I had done something similar with photoshop creating an animation of the item, about 20 frames from large to small and vice versa, also changing in the last few frames opacity to give the impression of fading, and it was ok, but how much work for each item!
Being able to use the scale level of Engine would be sufficient only one frame and the fade is created directly from the script