How can I decrease the text size or button size in notifications area?

What you are asking most likely cannot be done (at least easily, anyway). Those buttons might be controlled by the system UI or the app creating the notification. You can try your System Settings > Display > Font size, but this will alter the font size on everything.

Alternatively, here's an easier fix- tilt the phone to landscape to widen the notification window.

After installing the K-9 App for Android, I find that my notifications on my Galaxy S3 are a bit different. Can you confirm that you have the Delete button set to show in the settings?

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