Chris,
I don't think you'll find letters that small. I spent several years in the sign industry and never saw anything that small in wood, it really would be pushing the material to its limits, as you know. You could try a local sign shop or trophy/engraving shop to see if they have access to, or can fabricate, wood letters in that size. They'll probably tell you NO or they'll be more than you want to pay.
I was going to suggest you fabricate them yourself but I won't, because the frustration will be more than it's worth (it's unlikely your success rate will NOT be acceptable - I would expect lots of problems like breaking letters).
MY SUGGESTIONS:
A) Buy plastic letters and 'faux' paint them to look like wood
B) Have someone sandblast or engrave the lettering INTO the item/materials you want to letter - this will allow you to get the size lettering you want and it will be much more durable. You'll also be able to put paint into the lettering/details, if you want more contrast or decoration. If you go this way, choose wood that doesn't have a large density difference between its early and late grain, and don't choose a wood with open pores/grain structure (avoid woods like oak - it's OK for larger letters but its open grain will be a pain for small details). You can sandblast the details yourself, if you get someone (like a sign company) to cut the necessary stencil for you. You'd take the stencil and use a small 'cabinet' sand blaster. BTW - do not breath sand blasting sand (silicosis) - use respirators.
Good Luck,
Dean
PS - if you want more advice or any clarification of my suggestions, PM me.