PM Sent!
As far as how small a hammer a blacksmith uses... all depends on what we're making! I imagine we can use hammers just as small as you do, if we're working small pieces. Hot steel is just as soft, if not softer than room temperature gold...
The smallest hammer I currently have, is this little ballpein. Which comes in handy! And is great for making copper rivets out of electrical wire for my knife sheathes.
I focus more on the blacksmithing right now, but I do plan to branch out down the road and work with silver, and various other white metals. I've made a few bits of jewelry out of the cases of stainless steel bolts I've picked up :P