Small House/Large BTU Stove-Potential Issues?

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Depends on how well your house is insulated. I hear a 1000 sf with the biggest pellet stove available at the time of purchase. It just barely keeps up on single digit days.

I can only speculate as I don't have insulation but If it's well insulated the only downside I can see is there might be more carbon build up from running at low burn as opposed to high burn.
Harman P61A I’m my 1500 sq ft place and it keeps it nice and toasty, easy to maintain and clean
I think you will be fine.

Now, the P61a in my 650 sq/ft basement is complete overkill (long story that I'm tired of rehashing - but let's just go with it used to make sense, but now it doesn't). I cannot burn the better quality pellets in it as there will be a mess from the short burn times (as mentioned by @3650 .) But that's okay, I don't usually buy those, and when I do find them on CL/FBMP, I burn them in the P43 on the main floor (950 sq/ft).

However, it does great with middle-of-the-road pellets (such as MWP, GS, NEWPs etc) and even some very cheap, luke-warm burning pellets did the job.
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You will be fine ( worst case more frequent cleanings) biggest challenge will be getting the heat distributed through the 1600sq. feet unless you got a wide open floor plan
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Rich said it best. It matters how easily heat circulates in your house. A box fan or two on the floor pointed in the right direction does wonders.