My surgeon selected a size smaller ball than appropriate for my hip replacement because the right one was dropped, is this okay?

Yes. There are a number of ball sizes available and each one differs in diameter (size) from the next one by only a few millimeters. A smaller head size means a thicker layer of polyethylene in the acetabular shell, which theoretically may mean it will last longer. In any event, it's not something to worry about.
Yes. The smaller balls (femoral head) actually cause slower wear and tear of the plastic prosthesis. The dislocation rate is slightly higher initially, but usually become the same after about 3 months.