You're right about the story. A good writer can make anything fit anywhere. And let's be honest here. Walt would have made the DL castle much bigger if he had had the time, money and land. But the cold hard facts of reality dictated that he had to settle for a dinky castle. Of course Roy didn't have those constraints with the MK castle. Your "theme" explanation is dubious.
This has nothing to do with good writing. Is anyone saying that Disney couldn't create a Park with a large castle that would fit in cohesively and tell the story that it was intended to? Of course not.
This has
everything to do with going back and trying to
rewrite what has already been written. This is like a filmmaker capturing footage in the arctic and using CGI to place a palm tree on the landscape after the fact. It's entirely possible to do, but makes little sense and immediately clashes with what was already there.
It's wrong, and any audience would know it.
As an aside, I would also add that the narrative surrounding Disneyland points to Sleeping Beauty Castle being small as a deliberate decision. It was supposed to be something intimate and not intimidating; something that would immediately make guests feel at home.
While some might say that was spin, and it likely was, it succeeded on all accounts. It has remained beloved for over 60 years. I'd also advise looking at New Orleans Square. That land followed in the same mold of intimate environments that invite guests to explore and feel comfortable. This was a land added far later, and yet bolstered and respected the existing creations and lends credence to a deliberate choice on Sleeping Beauty Castle.
I'd also add that with each decision Walt Disney and his team took in the 1950s and 1960s, they complemented what was already there. Especially the Matterhorn. The perfect complement.
This choice in Hong Kong is far from a complement, it is an utter of rejection of all that has come before in that park. It's a shame.