Yet at the same time, I think this is an example of overdesign for firearms, which is a trap that gun rules OFTEN fall into in RPGs.
My suggestion would be to ignore the rule and let firearms scale just like any other weapon.
Firearms are indeed often overdesigned but I think the reason is to make them feel different (rather than simply work differently) from more primitive ranged weapons. The real question for Kor is whether he feels that this rule regarding small characters achieves that end. I agree with James, however, about the logic behind the rule: little guys have more trouble with recoil. Also, a small rifle shooting the same projectile as a medium weapon will have even more "kick" than the medium weapon--think of the difference between shooting 45LC through a colt-style revolver versus through a derringer.