First of all, the procedure is called dimensional regularization, not dimensional renormalization. Regularization is the process by which we make sums and integrals non-singular so that their results aren't infinite – the result "infinity" carries no meaningful physical information because the results of measurements in physics are always particular finite numbers.
After the regularization, the results of integrals are manageable finite expressions although they may still diverge in the limits we call "physical".
Renormalization is another step in which we carefully distinguish bare values of parameters (in the action) and the observed values, making sure that the theory with the appropriate values of the parameters agrees with the observations. Renormalization is something we would have to do even if the underlying integrals were convergent. It usually follows a regularization procedure but is independent of it.
Dimensional regularization is just a methodology to evaluate particular integrals – not mentioning what physical quantities or parameters are expressed by these integrals – so it's clearly a regularization technique, not renormalization technique. A broader technique to see these integrals in the loop diagrams and give them the right interpretations for the amplitudes may lead to $\overline{MS}$, em-es-bar, which is a renormalization scheme (a renormalization scheme is given by the choice of the renormalization scale as well as the exact definition of physically measurable quantities, i.e. scattering amplitudes of particles with certain energies, that play the role of the coupling constants for Taylor expansions etc.). But dim. reg. itself is just a regularization technique.
Now, the new parameter $\Lambda$ in dim. reg. is auxiliary, newly added, so we finally expect or want it to drop out of the physical expressions. Indeed, $\Lambda$ of dim. reg. also drops out of the final physical expressions although it's only after the full calculation of the physics quantities including the renormalization. In particular, various quantities linked to certain scales may depend on $\Lambda$, or the ratio $\mu/\Lambda$ involving a new auxiliary scale, but the observed/predicted cross sections are linked to other observed cross sections etc. by formulae that contain neither $\Lambda$ nor $\mu$.
Scale invariance
Below equation 7 of the paper you mentioned, they make it rather clear what they mean by the scale invariance. They mean that the expression, the integral in equation 7, is formally scale-invariant under $k\to kx$. If we just rescale $y\to ky$ as well, the integration variable, the factors of $k$ cancel between $dy$ and $1/\sqrt{x^2+y^2}$.
The integral itself is divergent but if we were satisfied with this unphysical answer $\infty$, it would be OK for the scale invariance because $\phi(x)=\phi(kx)=\infty$.
As they make it clear between equations 7 and 12, this scale invariance is subtle for divergent integrals because while we may say that $\infty=\infty$, it's still true that $\infty-\infty$ which appears in physically important quantities (work that is done) is an indeterminate form whose value may be any finite (or infinite) number. In particular, if you rescale $x,y$ by $k$, the $\overline{MS}$ renormalized expression changes additively by $(\lambda/4\pi\epsilon_0)\ln k$ with some sign. It's a purely additive shift that is independent of $x,y,z$ and such an additive shift may be undone by a simple $U(1)$ gauge transformation whose gauge parameter is something like $(\lambda/4\pi\epsilon_0)\ln(k)\cdot t$ i.e. linear in time (because we want to eliminate the temporal $A_0$ component).
So the renormalized value of the potential isn't quite scale-invariant because, as you correctly said – and it is easy to verify it by looking at the actual logarithmic expression for the potential – the value of $\Lambda$ would have to be rescaled as well. But if $\Lambda$ isn't rescaled, the change of the potential under $\vec x\to k\vec x$ is just a simple constant additive shift that is equivalent to a gauge transformation so it's still true that all gauge-invariant quantities that may be calculated out of such a potential (and physical, measurable, observable quantities have to be gauge-invariant) are scale-invariant. More precisely, they are "covariant" and get rescaled by the right power $k^\Delta$ where $\Delta$ refers to their dimension. That's why the electric field goes like $1/x$ etc.
For this reason, one may use a bit sloppy language and say that the potential itself is scale-invariant. But the extent to which this statement is true for the potential in various forms – formal expression for the integral, the naive result of the integral, or the result in a renormalization scheme – depends on the details in the way sketched above.
On the other hand, as you wrote, the translational invariance in the direction along the wire is uncontroversial, manifest, and protected by all forms of the potential or the field strength.