I was lucky growing up in South Auckland as literally EVERY team we came up against were stacked with big boys. Infact we were probably one of the smaller sides in the comp each year. But we were the fittest (most of the boys played rep touch) and the most skillful. We had a bloke who would play for the Junior Kiwis and the Warriors and he was very football savvy even at a young age. Coupled with a couple of blokes who would play at various levels in the system at different Aussie clubs and we were a team to beat.
That being said, we were coached smartly. Some of the other teams I could really feel for. I was a handy footy player but was more often than not plonked on the wing because I was smaller than the others which sucked until I learned the ins and outs of teh position - particularly on defence and kick returns/dummy half scooting.
There should be open grade and restricted weight grades with the youngins, common sense should prevail.