The pets are always small.
Blizzard said it was for logistic, design purposes.
My pet, Fangster, who has leveled from a L9 Elder Nightsaber into a L14 Cat with me has Loyalty Level 6 (the highest, I believe) and is always happy (125%). Nevertheless he's still mini. I've also seen L25 Hunters walking around (yes, they are L25 *already*) and their pets are also mini.
Don't let the size fool you though - at 125% (fully fed) he can usually beat a "full size" mob of the same level.
Edited, Mon Nov 8 03:08:40 2004 by kingjord