As is noted a lot around here everything is possible within the limits of the system, it can be extremely hard to do though and that is the trick.
Same size- despite being ostensibly the same font very few games will use proper vector fonts so that is probably another font entirely (developers would most likely have had a vector font and rendered two bitmap fonts out of it). You are probably in a better position to tell us what goes in the font- it can be as easy as changing some markup in the font or you could have to dig right down into it and mess around at assembly level (or indeed you could have to do some graphics editing if it is hardcoded into the background- quite possible for fixed menu situations like this). The cop out method would be to find the larger font and convert it across.
VFW hack- I have not done so much with PSP font handling but given modern consoles including the considerably less powerful DS have serious font handling capabilities it could mean anything. For all I just said though adding a VFW hack is done is much the same way on every platform; you find the font, you add the necessary characters, you determine their width (usually ahead of time and stick it in a table although real time is possible if you have several cycles to spare) and then pass that on to the text handling routine.
On simple font spacing that could just be a matter of changing maybe a single instruction (or two if it has a hard coded limit per line)- I am not so familiar with the PSP graphics systems (contrary to my usual approach to things I mainly dabbled in formats rather than hardware and up for the PSP) but I assume there are Objects (sprites), backgrounds and maybe 3d as well all capable of a measure of layering. Where the text falls in those three I have no idea in your case; best practice says go for backgrounds on almost all consoles, but every one of us probably has several examples of deviation from best practice.
I could detail a rough idea for a line handling system as it probably exists here but I doubt it will do you much good (in many cases theory coding is slightly more useless than doing nothing).
On the A. Bonus line- if your logic was to make it smaller and hopefully allow more to be fit on the line similar to a PC style text editor that might not be how it works in this case (doubly so if it is fixed width font to begin with). If you have VFW hack in place at this point it will probably.
Short version is you are potentially playing at a fairly high level on a relatively unhacked system without many toys to make your life easier (you have some of the best in hardware debugging on a commercially available system that is not a PC but that is not as nice as a hacker friendly emulator).