How does greater wing loading really affect an airplane's flying characteristics? And how much can the wing load increase before negatively impacting the flying characteristics?
Sooooo many variables here and so little info to go on in your particular case.
Except, perhaps for slope-soaring gliders (?) extra weight is ALMOST ALWAYS, as a stand-alone variable, BAD. It increases stall (hence t/o and ldg) speed. It lessens climb rates. Increases descent rates. On and on, but you already have the gist of it.
If a smaller engine will provide the pwr to do what you want (whatever that may be, hugely dependent on the type of flying U do etc...) then use it. Extra weight just for the sake of "wasted" power does you no good, and some of the extra pwr will be "absorbed" just to carry around the extra weight anyway. If you're not sure how much pwr you need for whatever U want to do w/ a particular model just ask around these forums and execute searches to see what others have done and what the results were.
If you NEED extra pwr, well, extra weight is often (but not always) just the trade-off you have to make.
Thinking in terms of percentages may help. If you can add 30% more pwr for a 5% weight penalty (don't forget the extra fuel you'll need for a given length of flight) then that's a pretty good trade in a lot of cases. But if the model could already climb straight up after a 20 ft roll w/ a smaller, cheaper, more economical motor, then what's the point?
On the other end of the spectrum, I've totalled more than one model because it had only "enough" power, without the reserves to pull me out of trouble when I did something dumb.
I hope I provided more answers than questions for you. I'd be happy to expand on or clarify my opinion if you like?