That's interesting. This scaling law is a weird thing (I vaguely recall a myth about Galileo considering it as the most mystifying law of nature or something like that).

However, when you scale an engine down, the surface areas decrease less than the volumes. That means that you have more available area for your "pipes", and thus you can make them relatively larger. That allows lower fluid velocity for the same flow rate.

Thus assuming viscosity is an issue because it prevents fluids to flow as quickly as the cycle requires them too, making pipes larger should improves things, shouldn't it?