Found a doll transformation on magical girl reina マジカル少女レイナ volume 5 nightmare of doll shop, since it is a children book it lacks of images (really where are the mangas with doll transformation?) first girl of first link turns into a doll on second link.
https://pbs.twimg.com/media/CiZvorNUYAArkdB.jpg:large
https://pbs.twimg.com/media/CiZvz2GUgAEKCYe.jpg
but from what i read seems like the town people did turn into a doll since one of the images she is surprised by seeing a doll
https://pbs.twimg.com/media/CiZvomVU4AAaA9B.jpg
again since there is no digital version and a children book will be really rare to find it online there is a link to amazon
https://www.amazon.co.jp/%E3%83%9E%E.../dp/4265063829
not really the episode but seems like prisma illya 3rei going to have illya bear plushy transformation
https://www.youtube.com/watch?v=9pqNKcHi_Us around 0:39-0:40 shows up