The Dragoons special rule in "Last Argument" talks about possibly reducing the size of a unit to a small unit if it was disproportionately smaller than a line infantry unit eg: If there are 12 figs in your dragoon regiment, it should be "smaller" than a 24 fig line infantry battalion.
However, I would retain the stamina value at 3 if that is what it had when it was mounted. Damage caused to the unit would have much the same morale impact if mounted or dismounted. However, fire values and melee values would be reduced to that of a small unit so that Line infantry should still beat them in a fire fight. This would save any messing about with variable stamina, and people having to remount to become unshaken etc.
Thanks for pointing out the problem and I shall pencil it in for the second edition!
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