I've had similar issues with this in RMU, and I think that players of both systems will continue to ask this precise question until the rules are clarified. I guess HARP is where this size system is coming from?
Unless something is done, my houserule will be the same as Dagorhir's. I will also add the 'light' property to light weapons, including shortsword, light mace, light flail, etc., which means that they can be wielded in one hand by creatures one size smaller.