I would first try a Q-tip dipped in alcohol and then carefully apply it to the lettering. This is what I have to do with Bachmann lettering. It's not quick but it does seem to be the safest method for removing stubborn lettering! Solvents are tricky! I have used Acetone for wiping up a smear. It does work but it will almost immediately screw up the paint underneath! I DON'T recommend using it unless you have the technique mastered (and yes, I screwed up plenty before I figured it out. You get ONE swipe with a semi-damp paper towel - NEVER pour on the plastic!! If it didn't come off in one second then let it dry completely and you can try again but be warned!! Acetone EATS plastic!!) Better to try and remove the lettering with tape first and then work with alcohol second and start to work up the line with paint thinners etc... (Acetone is a LAST resort!)if those don't completely do it.
I put some dry transfers on an LGB Mikado about 2 years ago. Covered it with Testors Dullcoat. It did not wrinkle the transfers at all. I don't leave the loco out in the sun that much other than when running, but it still looks great. If you leave your locos out, the Krylon UV matte would probably work better, but I have not used it with dry transfers and I don't know if it will wrinkle them? But worst case is cover them with Dullcoat and then Krylon UV matte.
My personal feelings are that dry-transfers are much easier to work with than decals! Almost all of my equipment has been re-lettered with dry-transfers. The "dull-coat" seals the lettering and it works great! One caveat: I have been reliably informed that the "dull coat" will weather badly in the sun if you are planning on leaving your rolling stock out in the elements. I don't so I have never had any problems!