Sorry about using the abbreviation without an explanation. RCE stands for Rich Content Editor which is what is used within Canvas to create content. Below is an image of the RCE in Canvas when editing content.

I believe I am seeing what you are as well. When I use the Assignment Submission Type External Tool and use Studio to select a Studio video, I am not getting an option to expand to full screen and the frame that contains the video is too small to see the entire video and questions if you are using a quiz attached to the video.
While I have not had a chance to check with Canvas Support yet to see if this is a bug in the design, after a quick search I did not see other posts about this in the Community.
If you are not worried about grades going into the Canvas Gradebook, you can always just embed the Studio video in a Canvas Page. You can check the Insights (also mentioned in link below) for the video to see who watched it and can also check the Quiz Results if you are interested in seeing how the students answered the questions.
How do I embed Canvas Studio media in a Canvas course using a Chrome or Edge Browser?
If you are wanting to have the grade go into the Canvas Gradebook, I would suggest creating a Canvas Quiz and embedding the Studio video in the directions of the quiz. Instead of embedding the video with a Studio Quiz attached, I would just embed the video and create the questions in the Canvas Quiz. This gives you the ability to include more than True/False and Multiple Choice question types and the grades from the Canvas Quiz will be entered in the Canvas Gradebook.
These suggestions include some basic details. Feel free to reply if you have additional questions or wnat more information.