From what I understand the optimization can go in various ways, and this includes the rendering and the font
Do you know why the letters become too small to read? Because inherent to fixed width font is that it is optimized for fixed width first and then for readability.
Now, if youth are able to use a 3.5" correct and without problem while elder are not we might have a special market for those elder. The Nokia N900 O-Series (for Old people). I doubt it will see the light though. So perhaps you need a different manufacturer.