This is a really, really annoying bug that I wish Owlcat acknowledged and fixed in 1.3, but as far as I know nothing's been said on it.
It applies to basically every piece of worn equipment - potions, scrolls, weapons. Makes playing a smaller race as your MC (including Dwarf!) really annoying, half the time I can't even see my Dwarf MC behind his giga-sized Greataxe, it looks ridiculous. It's like the game gets confused and uses Large or Huge sized weapon models instead of small ones.
Maybe I'll try my luck and ping u/OwlcatStarrok?