I like the idea of the shadows, but then I'm biased
You could exchange this easily with normal video projection of course.

Another idea might be to use a difference in depth perception. A trick I've seen used a couple of times in puppetry: have a small version of Alice upstage, and as she 'grows', she appears downstage in a larger version. Use a 'hide' (small flat or a rostra) to create different levels in height and split the upstage from the downstage. (In this way, you don't have to have Alice walk on/off stage, you'd just need someone or something to act as a double, and with good timing remove the one for the other) Add some vegetation and other set pieces, and it can look quite good.

It's easier to see than describe, so I found a video of one of the shows I've seen it in:
http://www.crabgrasspuppets.com/tortillasvid2.html
Note the downstage table, and the upstage curtain which hides the puppeteers when they work in 'miniature'. (The video is quite slow in getting to the actual good stuff, so you may want to fast forward) Ignore the fact that it's puppetry, just focus on the fact that they use different staging levels to create the sense of distance.

Of course it entirely depends on the creative direction of the surrounding scenes....

Your source for handmade shadow puppets at
Puppets in Melbourne

You could use a scrim with a reflector US to project the shadow on to or place Alice in front of a profile, focusing her shadow on to the US of a scrim. The profile would need to be mounted on a 'turtle' [skid] at an angle so as not catch the eyes of the punters. They can then play about with the transpositional balance of the lighting & Alice to gain the required effect. The shadow image would be much sharper than being defused thru or bounced off a cloth. 

The Kabuki style vegetaion growing can be a hit 'n miss situation & of course the dropper lines need to be fairly invisable.

If you don't have a fly loft you could always make up a Tumbler [oleo, olio] or even use a scrim as aTraveler for the shadow & reveal.

{For some reason this part of my orignal post didn't make it & vanished?

I can gaurentee it was my fault, getting all previous on my self again!}

Use a strobe or other light effect initialy prior to her shrinking upstage of the scrim, then use the profile ['Z' position] with Alice moving from R of USR, along in the beam angled to DL of DSL, so as to shrink the shadow. Then transpose the lighting to the general state & take out the scrim. Idealy the scrim should be set as far DS as possible, dependant on the area you have to play with, to give the most distance for Alice to travel on the angle. Then return to it's general lighting state & taking out the scrim, Reverse to bring her back to normal of course, only the SR ofAlice will be viewed during the reveal with the rest of her otlined, but the profiles level can be adjusted to suit.