Thanks for the feedback. More information indicators would've been useful to add.
Taking damage reduces your max ammo, but not the recharge rate.
Less ammo makes the player weaker and leads to a snowball effect, which can be annoying. This was decided to better fit the limitation and story of the game.
I think it forces the player to be mindful, as every hit taken actually matters. I had tried making the ammo cost proportional (also damage.) It made getting hit feel inconsequential and only lead to needlessly drawn out sessions.