Stronger heater for a smaller tank?

It should be fine. The heater has a thermostat inside of it, and will not overheat the water. Also, you should not set it lower than the temperature that you want just because it is a larger heater. Normally with a new heater, I want to make sure that it is calibrated correctly, so I set it at about 76 for a few hours and check the temp. If it is dead on, crank it up to whatever temp you want, if it is a bit off, adjust accordingly.

if you use a 'lower' setting, your tank temperature will just be lower. the benefits of a higher wattage heater is it will run less, get your water warmer, faster, and keep it that way with less effort. you can set it to the normal temperature that you want for your tank with no repercussions.