
Ultrace |

Yeah, RAW it's plain to see, but admittedly it doesn't make total sense. Your faerie dragon's melee reach would then be greater than the length of his breath weapon. How fearsome is it to see someone who can breathe fire -- but only up to their elbow? I suppose the dragon could try and grapple someone and drag them into range of their breath weapon...
Your GM could houserule that size change affect breath weapon attacks, but but does open up a can of worms for other creatures and attacks. Does a gaze attack have a smaller or greater range based on the size of the eyes that emit it? Does a Colossal ghoul emit stench at a larger range? How far away can a banshee wail when she's huge?
It's worth noting that your faerie dragon is just that, but should you choose to pursue this road, the entry for "true dragons" does state:
Breath weapons come in two shapes, lines and cones, whose areas vary with the dragon’s size.
Thus, it does seem that size should have some effect on breath weapon range.