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It's been done quite a few times by all sorts of authors. I can think of "The Bagdad Chest" which became "The Spanish Chest" (Agatha Christie) for one (one with and one without Poirot). "Flowers for Algernon" was a longish short story, then re-written a novel. Do what you think needs doing, write a brief preface if need be, but go for it... it's your creation after all.
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