А little в английском не обязательно обозначает размер? Мне кажется, диминутив здесь не для указания на размер употреблён.
Little означает эмоцию, похожую на те, которые мы выражаем суффиксами чк, шк.... яичко, солнышко, местечко, малышка...
Small означает тупо размер, без эмоционального налета.

Speckled Hen
Once upon a time there was a grandpa and grandma.
They had a speckled hen.
One day the hen laid a little egg; not just an ordinary egg – it was a gold egg.
Grandpa hits, hits – it doesn’t break.
Grandma hits, hits – it doesn’t break.
A mouse runs past, its tail touches it and the egg falls down and breaks.
Grandpa cries, grandma cries, and the hen clucks:
- Don’t cry, grandpa, don’t cry, grandma: I’ll produce you another egg, not gold – (but) ordinary!
Something like that. Some of the corrections have been made just for the sake of readability because I suspect those lines didn't look any good whatsoever. But all in all, I'll leave readability and "smoothness" up to you because you're a native speaker of English (if I'm not missing anything). "Produce" is also a principal translation, you can replace it and other words with anything you feel right to make the whole thing sound natural, sweet snd smooth like a little fairytale, not like a translation of a foreign little fairytale.