We present the temperature- and thickness-dependent structural and morphological evolution of strain induced transformations in highly-strained epitaxial BiFeO3 films deposited on LaAlO3 (001) substrates. Using high-resolution X-ray diffraction and temperature-dependent scanning-probe-based studies we observe a complex temperature- and thickness-dependent evolution of phases in this system. A thickness-dependent transformation from a single monoclinically distorted tetragonal-like phase to a complex mixed-phase structure in films with thicknesses up to ~200 nm is the consequence of a strain-induced spinodal instability in the BiFeO3/LaAlO3 system. Additionally, a breakdown of this strain-stabilized metastable mixed-phase structure to non-epitaxial microcrystals of the parent rhombohedral structure of BiFeO3 is observed to occur at a critical thickness of ~300 nm. We further propose a mechanism for this abrupt breakdown that provides insight into the competing nature of the phases in this system.