Hello, @Nick,
Yes, You can use the smaller image for the thumbnails as well. It’s not a big deal. you can find a specific resolution by adding multiple images with different sizes and then check the result to pick a final image with its size and then upload the same size images for thumbnails into your store.
You can also, check the WooCommerce support forums to know more about the thumbnail images size like what is the best size of thumbnail images WooCommerce.
Regards 8Themes Team.