The eyes have it!
My favorite example of pupil changing would have to be at the end of "Happiness Hotel" in "The Great Muppet Caper". Gonzo takes everyone's picture and they do a quick edit wherein they've switched the pupils on all the puppets to little teeny dots. Very funny!
The only time I can ever recall a puppet's eyes in the action of dilating would be ET, when his eyes blink and dilate in reaction to light. A VERY elaborate set up and mechanical achievement. This particular set of eyes actually contained mechanical irises. There were, of course, several different puppets/costumes/gloves/limbs/eyes to create ET, and usually character pieces were only used in specific shots for specific purposes. A mechanical iris is a rather delicate thing, and so were only used in shots requiring active dilation.
My opinion is that a dilating pupil would be far more difficult, expensive etc. to warrant contruction of such a rig, unless absolute realism is required and budgeted for.