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MicroStation Mouse here. I have spoken with the CAD Mouse Supervisor and his answer is as follows:
Scaling line styles can be done by selecting Element|Line styles|custom from the MicroStation V8 2004 edition main menu bar. This opens a dialog box which lists the custom line styles available in the file and allows you to establish a scale factor. To set the scale first select the line style you want to scale from the list box on the left side of the dialog box, then click the checkbox beside scale factor and enter the scale value you want to use. Now click the picture of the line style at the bottom of the dialog box to make that the active line style. The next step is to select all the elements you want to apply that scaled line style to. Once selected you can type in the key-in command "Change style" or use the Change Element Attributes tool with the "Use Active Attributes" and "Style" checkbox turned on and accept the changes by clicking in the active view. All selected elements will be updated to that style with the new scale.
You can also set a scale factor for a custom line style defining a byLevel or override style in level manager. This scale change will then affect all elements on that level whose style is set to ByLevel, or in the case of override symbology all elements on that level is the "Level Symbology" view attribute is turned on in the view.
To do this open Level Manager in MicroStation. Select/highlight the level or levels you want to change. With the levels selected, click "Levels|Properties" from Level Manager's pull-down menu. This will open the "Level Properties" dialog box. In the "Symbology: ByLevel" or the "Symbology: Overrides" section of the dialog box set the Style value to the custom line style you want scaled. Now click the "Styles" tab on this dialog box. In the appropriate section click the checkbox next to "Scale Factor" and then set the scale to the value you want. Click <Apply> at the bottom of the dialog and then <OK>. All elements on the selected levels with ByLevel symbology will now display with the new line style scale. If you set the Override symbology then all elements on this level will display with that style if the "Level Symbology" view attribute is turned on.