My 3.5 month old has outgrown her bassinet. Shes started to roll and her arms are free but I want to keep her in my room. Is it ok to use a portocot in our room instead of moving her into another room in her cot?

Yes, your baby does need to move to a cot now - good that she is now arms free.

Most babies will be rolling over by 4- 5 months. Some earlier, some later.
This is very normal as babies grow & become stronger.
Many babies then prefer to sleep on their side or tummy.
This is not something that needs to be stopped. It is important to make the “new” environment as safe as possible.
https://rednose.org.au/article/what-do-we-do-now-that-a-baby-has-started-to-roll-over 

Ensure mattress is firm & flat & nothing soft or loose in her cot.
Continue to always place your baby on back for sleep.

How does she go with tummy time when awake?
Is she rolling to her side or tummy during sleep?

While a standard household cot is preferred a portacot can be used. However, a portacot is not as sturdy as a household cot.
Ensure the portacot meets Mandatory Australian Standards & use only the mattress that comes with the portacot.
https://www.productsafety.gov.au/consumers/keep-baby-safe/settle-baby-to-sleep-safely/portable-folding-cots-guide
Do not add any padding or softness to the mattress.
https://rednose.org.au/article/portable-cots

Your baby needs to sleep on the main mattress of the portacot not the bassinet attachment (if it has one)

She has a very strong neck and is able to hold her head up if she rolls. She can roll from back to belly. At this stage she hasn’t rolled over in her sleep if she’s in a deep enough sleep. She has alerted us if she’s stuck and unhappy about it.

Do you think it would be better to move straight to cot rather than using the portacot in our room? I was just hoping to extend her stay in our room a little longer

It is entirely up to you - she needs the space of a cot rather than a bassinet. You can use the portacot for a couple of months & then you may feel more comfortable with having her in her own room.
Red Nose definitely does not recommend using a bassinet once they are rolling.