I do not have a ton of experience with azaleas as bonsai, but in my garden the best time to prune rhodies and azaleas is after they bloom in the spring. Pruning them too late (July+) sometimes stops them from flowering the next season.
Not sure this is a good time to be doing a cut…but like I said, I have little experience with Azalea as bonsai. “Take it with a grain of salt”.
Matt I take it you are in southern California. I would imagine in that location you would be fine cutting off a pencil sized branch. Azaleas aren’t the fastest healing but a cut that size should heal just fine. As far as styling if you prune off the branch tips you will be cutting off next years flower buds. That is up to you weather you want to have flowers next year.
I agree that after flowering is the best time to do structural work on azaleas. I have significantly reduced large trunks to one or two lower branches on clump styles and had complete reinvigearation. Most trunks that had all branches removed also sprouted, a few did not. I have also cut a two trunk azalea in two and now have two lovely little bonsai developing in very different styles that could not be reconciled as a two trunk bonsai.