""""""but what about if there is a whole paragraph of text where many of the letters could be
quite small?""""

I think you just need to move into poly apps. Just about ALL of them just do chisel text naturally...

Heightmap route wont give you very crisp results and i believe you would run into the same thing. Parts will be hard to achieve. Just look at a capital N in the times new roman and look at michaels solution against it...

You could make an attempt as frenchy said and take a month to model every charactor of the times new roman uoper and lower case.

But "paragraphs" would still be pretty tedious...