Joe, when I started the first magnets I bought were the size you stated. I use them to play with. No idea what you mean by cheap but the last batch of N42 1" x 2" x 1/2" magnets I bought were only $3.61 a piece. If I figure right it would take 8 of those small magnets to equal 1 of the larger ones so unless your buying them for like 25 cents a piece I wouldn't do it.
My thought is you will frustrate yourself using those magnets. Since you said you CAN get them I assume you haven't yet. It is my thinking that anything you can do to increase your chance of success will keep your enthusiasm up and help to insure you won't give up before you see real results.
For less than $50 you can have 12 larger magnets. On a 10" disc with a second blank disc you can have a wonderful little first alternator capable of putting out amps, not milliamps. Even 8 larger magnets would give you a better chance of seeing results sooner instead of later or never if you give up.
You can do it and you can get lots of help. Don't make it too hard for yourself.