See, that's where I disagree. (not with Diaglo, but with Laslo and Derub.)
I don't think large size is a bonus. I consider it a drawback.
I cannot determine what is in your game that makes it seem overpowered, I'm not there to question your judgement in your campaign. However, in my game, there's problems with being large sized.
Large creatures simply do not fit in most medium sized buildings. I DM a large character, and he has to be constantly -2 str due to the reduce spell that needs to be cast on him to function, and greater reach never comes into play that often. The rare times when he's full sized doesn't matter too much, since that's outside combats, which in my game usually cinsists of archery fights anyway.
Now, if you compare the half ogre to the hobgoblin, yes, there's some serious wonky balance issues there, I admit it. However, the conclusion I have come to is that hobgoblins need an ECL of +0, not to nerf half ogres.
However, that's my own personal opinion.