The size penalty with weapon type only pertains to the base attack of the weapon. Therefore, in your case, the base weapon attack is 100 and it will be reduced to 75. This is a very small penalty on such a high rate server here, but if you are so concerned about it, why don't you give the dagger the same effect as a drake card? Easy solution.
And regarding other weapons that do have a size penalty, two-handed swords, axes, and fists also suffer from the same size penalty. I'm not too familiar with the donation and legendary weapons here, but I'm sure that there is a donation/legendary fist that suffers from the same penalty.