But the A&EG section on larger and smaller weapons says that those values only apply "If you design a version of a particular weapon that is larger or smaller than the standard presented in the PHB..." Since the PHB clearly lists the damage values for all of the standard weapons in both Medium and Small sizes, we must clearly assume that the PHB values are the correct ones, as they're listed in the source rather than homebrewed weapons which would fall under the size and damage rules.
I'm pretty sure we should be using rules from a book intended for 3.5, not 3.0...
I might admit to agreeing with you if it wasn't my damage on the knife's edge, so to speak (that was terrible), I'd prefer a DM ruling on this one.
What exactly is the disagreement here?
All that means is you can enchant our armour Descan.
...Wait, since Descan can actually do the enchanting, does this mean our enchantments are cheaper here as well?
It'd depend on the requirements of the enchantments. He probably doesn't meet at least some of them.
This, he needs to have specific spells and such. But if he does have them, then you can take 1/3rd off the armor enchantments. Which means, yes, you get enchantments for 1/6th listed cost.
(We are now at CR 35. Half Dragon Tarrasque Liches.
In all seriousness, the things I have prepared are probably not going to be powerful enough. We'll see after the first couple engagements.)