It is totally up to you whether Starfleet is able to produce size 1 fighters or not. Every military or "science fleet "would love to have something the size of a Fiat with the firepower of a light cruiser but I believe that, without a tremendous technological breakthrough, it isn't realistic to assume that a reduction in size can go without a noticeable reduction of performance.
I would rather refine the rules concerning the consumption of storage capacity than allowing the rules to affect the game universe.
There might be a solution to all this, though. If you have seen Cease Fire you will know what I mean.
"Give me a tactical analysis of that shuttle Subcommander!"
"It is difficult to get clear readings but the sensors are picking up 400 lifesigns, a type-H dual warp core and 250 quantum torpedoes."
“Worried? I’m scared to death. But I’ll be damned if I’m going to let them change the way I live my life.” - Joseph Sisko - Paradise Lost