I had this same problem when I designed a character that's a dwarven hunter who focuses on archery. I want him to have the option to ride his bear while firing, like a Mongolian horse archer. Seemed pretty legit since dwarves are stocky but smaller than humans and bears are bigger and stronger than horses, and people ride bears in fantasy settings all the time (Golden Compass anyone?). But then I realized that my medium size dwarf would never be able to ride the normal bear, even when she grew because she would still only be medium as well.
The solution I came up with and GM approved is that I'm just using a grizzly bear instead of the typical druid's bear. It's basically the same but the stats are buffed and it's one size larger, so it grows from medium to large at 7th level (rather than 4th).
- Grizzlies start of medium and grow to large at Lvl 7
- The base speed remains 40 ft and you keep low-light vision and scent.
- You only get AC+1 to start, rather than the typical +2, but you get an
additional +4 when you reach level 7, netting you +3 (eventually).
- Your attacks are bite(1d6) and 2 claws(1d4) rather than 1d4 and 1d3
- At level 7 their attacks use 1d8 and 1d6+grab, respectively
- Initial ability scores compared to normal bear: STR+2, DEX-2, WIS+1
- Final scores compared to normal bear: STR+2, DEX-2, WIS+1, CON+2
I think it makes bears a viable but still balanced option. It functions like a normal bear, it's just a little bigger and badder, and can grab.