Nate,
I talked with 3 or 4 different lettering shops and they all had different ideas on how small of letters they could cut. I think the machine they have is a factor, but it also is a major PIA to peel the letters free especially when they are small. For the smallest letters, I had the shop print the black letters on a clear pressure senitive adhesive label. Then you only have to place the label instead of the individual letters. Once I sprayed the flatted clear coat of urethane over the finished lettered panels, the edges of the label are almost invisible. The clear coat also helps protect the label edges from peeling up. Hope this helps
Joe Hand