I don't think you have to mess with RS. Looking at the datasheet for the VFD it says this:

One byte data (RS=1) which follows the "Function Set Command" is considered as brightness data.
When a command (RS=0) is written after the "Function Set Command", the brightness control
function is not initiated. Screen brightness is as follows.
So it sounds like the brightness byte goes out as normal data would... you just have to send it right after a Function Set Command byte.
Try something like this:
LCDOUT $FE, $20, $03 'FS=4-bit mode and 25% brightness