Illegal or code violation

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You could use a size 5 starter on a 1/4 HP motor with no problems to other than to your pocketbook (and maybe control transformers). Overload sensing, whether heaters or otherwise, must be able to be selected appropriate to the motor.

To the best of my knowledge, the starter and overload package do not limit (in practical terms) the "ALLOWING EXCESSIVE CURRENT IN WIRES" during the inrush of starting. If the inrush exceeds the trip curve, the power circuit is (should be) opened.

What it sounds like you are asking is analogous to "can I use 10AWG wire for my 3 Watt night light receptacle". Yes, no code issue.
Overload protection will not be available with oversized starter and it’s corresponding oversized heaters (not changeable as an option with company) In rush current will be major issue during event of motor lock current, high load or similar fault. Starters allow higher current through smaller wires that would normally not be allowed in applications other than motors but only for a brief period during start up. You are talking about burning up motors or causing insulation fires to short circuits conductor to conductor and not to mention fuses way too large for short circuit protection.

Code violation I think so, and engineer at work agrees with me
 
Overload protection will not be available with oversized starter and it’s corresponding oversized heaters (not changeable as an option with company) In rush current will be major issue during event of motor lock current, high load or similar fault. Starters allow higher current through smaller wires that would normally not be allowed in applications other than motors but only for a brief period during start up. You are talking about burning up motors or causing insulation fires to short circuits conductor to conductor and not to mention fuses way too large for short circuit protection.

Code violation I think so, and engineer at work agrees with me

The bottom line is that if the overcurrent protection, wire size, and motor overload protection is sized properly for the motor, the fact that the starter is oversized is irrelevant.
 
You may keep the larger (I won't use the term OVERsized) starter, the incorrect (as long as too HIGH) heaters, if you add an inexpensive separate (I see them at $20 at Automation Direct) overload block and wire it into the control circuit (perhaps in place of factory assembly?).
 
The bottom line is that if the overcurrent protection, wire size, and motor overload protection is sized properly for the motor, the fact that the starter is oversized is irrelevant.
The bottom line is that the fuses (over current protection), starters (Overload protection) and their heaters are not sized properly, therefore excessive current may travel on properly sized wires. The job will not purchase what is needed
 
You may keep the larger (I won't use the term OVERsized) starter, the incorrect (as long as too HIGH) heaters, if you add an inexpensive separate (I see them at $20 at Automation Direct) overload block and wire it into the control circuit (perhaps in place of factory assembly?).
George B the company won’t make the purchase for supplies but assume this were possible, doesn’t a starter NEMA size have a range of heaters it can accept from lowest to highest amperes FLA?

Is it possible the larger starters lowest ampere rating for heaters may be too high?
 
George B the company won’t make the purchase for supplies but assume this were possible, doesn’t a starter NEMA size have a range of heaters it can accept from lowest to highest amperes FLA?
Often yes; indeed, IME, usually yes
Is it possible the larger starters lowest ampere rating for heaters may be too high?
Certainly, that's why I proposed the separate overload block. I'll ALMOST guarantee it to be less expensive than the 3 heaters SquareD or AB starters would need if they went low enough for your application.
 
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