Similar to what you did with the Levels and Colour Correction, go to the Effects Window and choose Video Effects > Keying > Colour Key. Drag that effect onto the footage in the Timeline.
Looking at the Effects Controls and the Colour Key settings, go to Key Colour. Click on the little dropper icon, located immediately to the right of the colour swatch. Once you’ve selected it, use your mouse to move the dropper icon over to the artwork in the Editing Window. Locate the colour in the image that you intend to “key out,” such as the white of the animation flimsies in the image sequence. By clicking on that region, the software will turn off those pixels. As a result, it will look as though the white becomes transparent. You can adjust the degree by using the Colour Tolerance slider.
To change the scale and position of a sequence compositionally
If you wish, you could move the position of a sequence in the frame or scale it up and make it larger.