The dynamics of field-induced structures in very dilute dipolar colloidal suspensions subject to rotating magnetic fields have been experimentally studied using video microscopy. When a rotating field is imposed the chain-like aggregates rotate with the magnetic field frequency. We found that the size of the induced structures at small rotational frequencies is larger than at zero rotating frequency, i.e. when an uniaxial magnetic field is applied. At higher frequencies, the average size of the aggregates decreases with frequency following a power law with exponent -0.5 as the hydrodynamic friction forces overcome the dipolar magnetic forces, causing the chains break up. A non-thermal molecular dynamics simulations are also reported, showing good agreement with the experiments.