re: Hinge Size

The main reason that hinges are mortised is to make them flush so that there is not a gap when the door is closed.  The screws do most of the holding so I would not worry about about their being only 1/16" as long as you can accurately cut it, which based upon your previous work, I have no doubt you can.  On the other hand, as long as the smaller hinge is robust enough for the weight of the door and well made, the  slightly smaller hinge should be fine as well.