If the threads are truly stripped out the remaining hole will be just about perfect for the Heli-coil tap. There will be no need for drilling the hole larger.
Some people will insert a long piece of rag down thru the hole to serve as a chip collector After the threads are cut, snagging the rag with a hooked wire and pulling it back out will remove most of the chips.
Others will just apply a thick coating of grease to the flutes of the Heli-coil tap before running it into the hole to keep the chips from falling into the cylinder. If this method is used the tap will need to be backed out about every 2-3 turns so the chips can be wiped off and a new layer of grease applied.
In any case, yes, a few chips may find their way into the cylinder but they are aluminum. The bore and piston rings are steel so the aluminum chips won't damage them.
About the worst thing that might happen is a chip might get wedged between a valve and it's seat.
If this happens, usually the valve will soon cut thru the offending piece and it will be blown out the exhaust along with any other loose aluminum chips.
Most Heli-coils have a driving tang at the bottom to serve to drive the Heli-coil into the threaded hole.
This tang needs to be broken off once the insert is in place.
Because the tang is steel it could cause a problem if it falls into the cylinder so be very careful at this stage.
If the rag was left in the hole until after the tang is broken off, the tang will probably be caught by the rag and removed when it is pulled out.