Stone Age Progression
This is all well and good , but their is one major flaw in choosing an insect hive mind - they can't lift 10 ounce stones apply the repeated , focused force necessary to fashion them into blades and hammers ; nor can they twist sticks with the speed and force to make embers , and even if they could , would they be able to utilize fire without constantly killing their units?
I think this is a flaw in your thinking. I don't know why you picked 10 ounces as a necessity for ant-sized stone age tools. You talk about blades and hammers and fire, but that's getting waaaay ahead of yourself.
Instead, paleontologists characterize stone tools in "modes". This goes from "Mode 1" simple hammerstones with a sharp edge, as at Oldowan 2-3 million years ago, all the way to "Mode 5" where small, sharp pieces of stone are embedded in wood handles for leverage starting roughly 15,000 years ago to the present. In contrast, primates don't control fire until about 500,000 years ago.
The basic way to make a stone age tool is flint knapping. This takes advantage of the natural fissures in certain stones like flint and obsidian to produce naturally sharp edges. Flint knapping can be a careful skill, but you can also bang flint against another rock and eventually you'll get a sharp edge; it doesn't require much thought. Primates were doing it incessantly 3 million years ago. The natural fissures in flint and obsidian might not work at ant scale, but there's probably some other stone that does.
This can then be used as an axe, or a blade. It allows chopping, cutting, shaving, and stripping of wood, hides, and even stone at speeds and precision beyond what a soft human hand or blunt rock can do. You can use it to chop down a tree, shave off the bark, and sharpen the edge to make a spear.
Watch Primitive Technology make and use a stone axe from scratch. He's using quite advanced techniques, but you see his basic knapping at the beginning to produce a sharp edge from a blunt river stone.
How Much Flint Could An Ant Flint Knap If An Ant Could Knap Flint?
There's three things at issue. 1) Can they physically make stone tools? 2) Do they have a behavior they can adapt for flint knapping? 3) Do stone tools give them an evolutionary advantage?
Because they're so small, their volume-to-mass-ratio is so small, ants and other insects are extremely strong in relation to their body weight. They can perform relative feats of strength far greater than much larger primates can. Strength is not an issue.
Ants also have strong jaws for grasping, so the ability to grab and hold the stone is also not an issue. It seems number 1 is a yes, they can physically do it assuming there's suitable stone available.
The second one is difficult to answer. Evolution is not a march toward intelligence, it's adapting to the environment. Ants are doing VERY well for themselves, evolutionarily speaking. They've been around for 100 million years, a very good run, and there's 20,000 species filling nearly every ecological niche on Earth. If you think of the hive as a single organism, its workers are its hands and its tools. Its not clear what advantage they gain by spending precious energy on tool production.
On the flip side, it's not clear that tool-making and intelligence are a good idea, evolutionarily speaking. Humans are on the verge of making themselves extinct giving tool makers a paltry 3 million years.
For example, you might say sharp stone tools would give an ant colony an advantage in warfare. It might. But its jaws already behave as weapons. Its already protected by tough armor and sheer numbers. Is higher intensity warfare with its cousins an advantage? That's what's going to get humanity extinct. Is being better at making war with yourself an evolutionary advantage, or a dead end?
Humanity's advanced tools are literally altering our environment faster than we can adapt, even with more technology. Is tool making an evolutionary advantage, or a dead end?
That said, natural selection is very short sighted and will try anything if it gives a short-term advantage. Humanity's experiment in tool making gave them a massive advantage for a few million years. Short-term on evolution's scale, but it still happened. So might a species of ant.
Finally, do they have an existing behavior which could be adapted to flint knapping? Primates, having hands out on long arms can use them as simple levers to strike things like predators, and competing primates. That behavior is adaptable to idly banging rocks together. In contrast, an ant's "hands" are its jaws and use grasping and crushing, not swinging and levering. But I'm not an evolutionary entomological psychologist.
The scientists could give evolution a nudge using artificial selection. A combination of an environment where tools are advantageous, plus selectively breeding ants with a propensity towards tool smithing. One possibility is to set up an artificial "arms race" against another species where both must advance their tool making to compete with the other. It might lead to long term ecological disaster and the extinction of both species (and many others), but in the short term it will produce the desired effect.
Fire use has similar questions: Is it advantageous to ants? Do they have a propensity for fire? Most animals, quite rightfully, run from fire. Human ancestors somehow became fascinated by it. That fascination gave the squishy primates security and warmth and allowed them to expand their territory to all corners of the globe.
Ants seem to be doing that just fine without fire or tools.