I have a 1 1/2" (one and one half inch) pvc water supply line that leaks at an inline shut-off valve (1/4 turn type, I assume). I realize I need to shut off the supply upstream to change it out. The valve is in between 2 elbows, about 3' (three feet) apart, so there is 'room to work' to remove the valve. Do I cut the pipe as close as I can to both sides of the valve?. and then is there some type of 'reducer' that fits over the line and into the valve for replacement?. or do I need to cut a specific distance from the each side of the valve to allow for the valve and the reducers?

Here is a page with some PVC fittings, so you can take a look at them.
White PVC sch40 plumbing fittings - PlumbingSupply.com


If pipe cannot be spread apart enough to insert a section
You could make a small section consisting of a union + small piece of pipe + new valve + small piece of pipe + union. Then cut to accommodate the length of the assembly. Glue the other ends of the union to the pipe. Slide section into place and tighten. This valve could be removed as a section in the future.

If the pipes CAN be spread.
Create a small section consisting of a coupling + small piece of pipe + new valve + small section of pipe + coupling. Cut to accommodate. Glue. Spread pipe to accommodate section.

Remember to DRY FIT everything first and measure carefully.
Follow glue instructions and use the proper cementing system. Cleaner/primer/glue.