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I don't own MZ but I'm familiar with plugins for RPG Maker that change the tile size, it's likely that MZ works the same way.  The sheet size would be smaller, the number of tiles per sheet stays the same.  As for the B tile needing the first square blank, it's a quirk of how RM's programming for passability works.  Think of it as if that tile is what's filling in that layer unless replaced by a different tile.

Thanks for your info Sharm! Reading the other comments, you are 100% right! 
So sad, I was really hoping for a bigger tileset when reducing the tilesize... sigh