I made the magnifier in two steps.

The first step is to determine the collider box. I only used squares for the obstacles and the magnifier so it is relatively easy to determine which part of the colliders should be removed or magnified.

The second step is to display things correctly. I used a camera to render everything to be magnified onto a render texture and display it as a raw image over the screen. Then I scaled it and repositioned it according to the magnifier's magnifying scale and position. Then I used a mask to display only things inside the magnifier.