The competitive laser-induced local heating and recrystallization effects in ZnO nanocrystals embedded in a MgO/ZnO stack are reported via resonance Raman spectra. The dependence of the intensity, energy, and resonance effects of the longitudinal optical (LO) phonon on laser excitation condition are discussed in the context of Fröhlich interaction. Redistribution of defects, impurity-diffusion, and grain regrowth caused by thermal and photochemical effects lead to significant changes in coupling strength of electron-phonon interaction, and the resonance behaviors are strongly affected by the interplay of local heating, heat trapping, and local structural modification in such nanostructures.