I am not sure that the quote of a smaller blade should be interpreted as extreme as a toothpick against a spear
Weapon size is of course depending on the environment as well as what kind of weapons you expect your foes to use and what kind of protection they will have. In wintertime here in Sweden thrusting in an icepick hold with a knife would usually be a better tactic than slashing with a hammergrip because of the heavy clothing. And I heard a quote from another FMA grandmaster (Inosanto?) that he would prefer a knife to a handgrenade if fighting locked into a phone booth
Other factors could be the principles of your fighting system; footwork vs static stances, counterattack vs blocking, follow or meet the strikes etc...
Another interesting thing I picked up when in Philippines (I hope this doesn't start a FMA discussion on a weapons forum):
To counter the Barong (heavy choppers) in Mindanao the Filipino Marines use shortened down Visayan Ginuntings (light, both stab and slash).
Of course they don't train to block the Barongs...
And from empirical tests I heard it has been proven quite successful.
For more quotes on shorter weapons vs longer try google on f.i. Angel Cabales.
Michael