I know for a fact that sucking the lower lip does cause a bulging misshaped blob on the lower lip. My son fell at about 18 months cutting his lower lip. He sucked the scar for the next 3 years creating a large bulging lip that his dentist said would likely not reabsorb. I taught him to place his tongue between his teeth and created a tongue sucker instead (not a good idea). The lip did normalize after a few months (but the tongue sucking has persisted into adulthood).
Lip biting in an infant would likely be related to the position of his upper and lower dental arch. If the lower jaw is significantly smaller than the upper there is an anatomical positioning of the upper arch over the lower lip that looks like biting. This would be genetic and could only be addressed when he is much older.
In this situation, the "biting" does not reduce the chin size, but the smaller chin size is the reason for the "biting.
Placing fingers and other objects in the mouth would keep the upper and lower gums separated and prevent the "biting" of the lower lip, but will not actually change the position of the dental arches.
As a child grows, sometimes a smaller upper or lower grows and becomes more proportional with the other.
Older children with weak oral muscles sometimes stabilize their muscles by biting the lower lip, jutting the jaw forward, or torquing the jaw to one side. A 3 month old is far to young for this to be the situation.