Blackboogers,
I'm not sure how to answer your question about how critical it is to spread the press area, but the reason that I have a large press area is because that was the size of the rail plates. Plus, the rail plates already had holes in them, so I didn't have to do any drilling or cutting. I'm no engineer by any means, but it seams like the actual size of the press area would be whatever size the billet is. For instance, if a billet has the surface area of 2" by 2", then the total amount of pressure the jack is putting out would be directed into a 4 square inches of space. The extra space on the plates would not be receiving any pressure.
The center plate that moves up and down is pretty much just balanced on top of the jack. This allows the plate to pivot a little if it needs to to get a flat surface on each side of the billet even if the billet is thicker on one side than the other.
I believe the same principal would work for larger billets, but the pressure of the jack would be dispersed more over the surface of the larger billet.
You have a good idea about using two heavy plates and hitting them with a sledge. This would apply even pressure to the billet causing it to weld evenly. However, you would need to get the plates hot so that they would not take too much heat from billet causing it to cool to soon. Also, you are going to have to work pretty fast while the billet is hot. If you had an way to the the billet between the plates in a quick manner, it may work. It would be worth trying.
If anyone out there has some engineering or any other kind of technical experience, please let us know what your opinions on this are.
-chris