Yeah, what the numerically lower ratio does is transfer less torque through the geartrain by making it spin faster. A numerically higher final drive is then required to multiply the torque back up again. That's why Honda's HRC kit for the XR600 included an NX650/XR650L primary drive set with a lower ratio.
1995 XR628R - Lots of goodies...room for more.
1985 Kawasaki GPZ600R - Another project.