Also, is this drawback enough to worry about as the increased squad size makes doing world provinces easier.
Oh, absolutely it is. An advanced player can easily get 150-200 KP from the tournament if they skip SS techs.(I got 335 last week) Dropping that number by a third has a huge impact on a player's advancement and on their FS. It will only get worse with the addition of the RR spell to tournaments.
The cost of upgrading wonders goes up with each level, so a player needs to do
more in the tournament each chapter in order to make the
same progress. Getting the same out of each tournament from chapter 7 to 13 actually means getting fewer AW levels each time.
This is why it doesn't work to just offset the drop in tournament ability by upgrading their barracks- they should be doing that anyways.
In my fellowships we expect players to get at a minimum of chapter x100 points, with the goal of chapter x200 points.
As for the tradeoff of easier world map vs easier tournament, there's no contest. Any city past chapter 6 with 3 of each boosted factory can negotiate the world map as fast as their scouts can move and doesn't need to worry about difficulty. On top of that, eventually, once they unlock orcs there is no reason to ever stop scouting until they get way out there to over 450 provinces, so negotiating is much simpler...but once they do hit 457 provinces scouted, they actually don't have a reason to scout anymore because they won't get any more expansions from it.
Then the world map army size becomes truly useless.
Even way before that scenario, it doesn't take long at all to reach a point where their scouts take 24h or more. That means they are getting about 56 KP and relics from the map each week which is nothing compared to the tournament. Then it goes to 48h scouts and the numbers are even worse.
All of that is moot though since it's not one or the other. A city that skips SS techs can scout and clear on the world map just as fast as a full SS city, but can out tournament them every week.
Anecdotally, I've seen dozens of players ask for a way to undo the optional SS techs, or to make them not count against players, but have not once ever heard from a player who skipped them and is going to go back and do them
Obviously, if they don't care about advancement this doesn't affect them, but one of the biggest issues is that
players are not consciously making this choice. Unless they or someone in their FS are avid forum readers it may never even occur to them that SS techs hurt them in the tournament until it is too late.