Well, I think the take of "Nightmare's death explosion doesn't scale to his regular attack" does make as much as sense as to say that it would scale, as it would be intuitive to say that the power unleashed when he died was greater than the the power of his regular attacks and blows. We don't know the mechanics going on here, maybe his regular attacks and blows draw upon a fraction of his "full" power, and the full power his body shows is blowing up like that uncontrollably. If this was the case, his regular attacks wouldn't have the same power as that explosion.
Then again, Nightmare was created by the Fountain of Dreams -> The Fountain of Dreams does nothing on its own and is entirely powered by the Star Rod. -> Kirby used the Star Rod as a weapon against Nightmare, Nightmare can take hits from it and reflect its projectiles with his cape, Kirby can take hits from Nightmare with his body exposed. I'm positive to say it's valid that the Star Rod's power should be equal to Nightmare's death explosion, so Kirby can also scale to it through these other means.
On 0 being increased, it's intuitive; if being bigger lets him have more power then why didn't he do so when fighting Kirby and Gooey? He got his body beaten and ripped and then his red "eye" beaten and it blew up. Something similar happens with 02, there are continent-sized Dark Matter beings making out Dark Star but then Kirby just has to fight their leader, who is smaller in size, intuitively because "he's the biggest challenge".