The model scale input does in fact work as sd_doomsday_event uses it to make the cool effects when the hammer hits the button after somebody won the round.
The only problem I see is that the model grows and shrinks at a constant speed and therefore switches between the two instantly, aka not smoothly. [being all mathematical: The first derivative of the size as a function of time is not continuous.]
To make it smooth you will need to make actual animations. And not vertex animations as Crowbar suggested, because you can't use them in from hammer.
And maybe Dr. Orange's suggestion can be taken a step further to create a sinewave-ish function which would have maximum smoothness, but that hypothesis needs to be tested by a smart person.