The only real penalty of a smaller line size is friction. When comparing two line sizes the smaller one will have more velocity as the fluid will more faster in the line. The higher velocity will cause more friction which will in turn cause a pressure loss. The pressure will have to increase (at the pump end) to maintain the flowrate of the larger line to the injectors. Essentially the pump just works harder on its end to maintain the same regulated pressure. I would think a -6 line could support 1000 hp if the pump was up to it, especially teflon line as it has a larger ID when compared to rubber.