I have heard that in most applications, a small truncation generally doesn't affect the drag but more likely will have a small impact on max lift.

On tiny models, like an HLG, a 1/16" trailing edge will have a much greater effect on flight performance than the same thickness on a 60-sport. That's just a size thing. As far as performance, the more optimized an airfoil or application, the more impact a truncation would have on performance. When building a foam wing, carbon fiber or plywood can be included in the center ply of TE construction to form a sharp edge when the TE is sanded.

I have had the opportunity to look at various full size airplanes, and they don't seem too concerned with a sharp TE. THe Canandair Challeneger trans-continental bizjet has a TE that's at least 3/8" thick and square. Cessna 17x, 18x, & similar have a TE that follows the airfoil contour, but then joggles down flush so the upper and lower skin lap together and get riveted. Plus, you can get a mod that allows a round beaded piece of plastic trim to be rivited between the upper and lower TE skin, leaving the round bead a good bit thicker than the TE. Saves your forehead when you walk into the wing though (and you will). I can't think of any plane that I've bumped up against that had a whole lot of attention paid to a sharp TE. Even modern supersonic fighters don't have a sharp TE, although the F-104 comes to mind as one plane that did have sharp wings on both TE and LE.