<minimizing...>
There are a few ways to do this.
The first, and fastest, way is to edit your appearance.2da for the player races, changing the values under "WEAPONSCALE" to something smaller.
Note that this will shrink *all* weapons wielded by PCs and NPCs using the dynamic appearance. Also, the appearance.2da needs to otherwise match the appearance.2da used by the mod.
A second method is to extract all the wdbqs_* files in ascii format using NWExplorer reborn and edit the "Setanimationscale" to a smaller value than 1. All edited models would need to be dropped in your override, but that should do the trick locally (for you only).
The *best* method, of course, is to import the model into a modeler and scale each one down a bit. :-)
In my opinion, of course :-)
<...the damage>