Shape Keys
Now let's take care of that "shrinking the stump" business.
It's done with Shape Keys or, how they're also called in other software, BlendShapes.
They work a bit like layers in photoshop.
There's a Basis, original mesh state A (array of all vertex positions) and then modified mesh state B.
So a shape key is B - A, a map of offsets to turn A into B. And the point is that now you can stack these layers of modifications together, or apply them partially.
Pic. Pants shrinking to fit into ankle-high boots
If you imported vanilla items from the game they most likely do have shape keys on them if it's body or leg items, prefixed with shp_.
After expanding the mesh during refitting process they'll still work, but likely won't be shrinking enough to fit into vanilla items anymore.
So what you gotta do is select the shape key, turn it to 1.0, modify the mesh to match original shrunk size, turn it off and get back to Basis
List of common shape keys
shp_kat - Bicep cut to fit into long gloves
shp_mom - Thigh cut to fit into long boots
shp_hiz - For knee length boots
shp_sne - For ankle boots
shp_kos - Booty shrinkage shape to fit inside long coats and other overhanging chest items
But typically you'll be dealing just with the first two
By the way, this is how face customization works as well, Basis is a Face with Eyes #1, Nose#1, Lips#1 and then there's a bunch of shape keys for Eyes, Nose, Lips, etc. that are applied depending on what you selected on character creation.