One of the disadvantages of a recirculating system is that the water that has cooled in the hot lines is fed back to the water heater for reheating. This is going to cause the heater to cycle on more often. Reducing the size of the line isnt going to help much I’m afraid. You might check into putting the pump on a timer that only allows it to cycle during “peak” hours.
The advantage of the circulating line of course is not having to wait for 2 or 3 minutes for the hot water to displace the cooled water in the lines before you can jump into the shower without risking cardiac arrest.