If you say so.
This was the basis of my Paladin. Worked great.
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I'm assuming that's 3x, yes? That's a 3x-type font, anyway. According to the 3.5 SRD, Charisma is definitely useful but only modifies a handful of abilities by giving bonuses to something you were already good at. You get a normal attack roll, already modified by your Strength; you also get to add your Cha modifier 1/day. You get normal saves, already modified by your stats; you get to also add your Cha modifier. The only thing that paladins really depend upon Charisma for is Lay On Hands, since the Cha modifier is a multiplier, not an add-on. But since I have no idea what sort of paladin you were playing; maybe you were more smite-y than heal-y.
And I imagine you were still getting a fairly good bonus with your Cha anyway, especially since you could continue to get ASIs without having to choose between them and a feat (and go above a 20, unlike in 5e). In 5e, if you don't have expertise or a similar niche ability, you are looking at a hard maximum of +11 in any skill at 17th level. In 3x, you can get +11 at fairly low levels, even if you're not in a class that gives a ton of skill points.
So your -2 tiefling paladin isn't as impressive a display of sacrificing a stat for a class concept as you might think.
Fantastic job at representing the world building which would allow for a racial +2 Str to Elves, and a racial +2 Str to Halfling, unless they dont meet a Con value of some type, which would impose a penalty to Str.
You should run with that, it sounds like a much more interesting system than floating +2/+1.
Why would I? It's much more fun for players to choose what they want. But the point is, it's
illogical to bring up "logical world building" in a fantasy world as a reason to insist on something like "orcs are stronger than elves and halflings." Because there
always going to be exceptions for that that make just as much logical sense, thanks to magic:
Maybe their character is from an elven house that wasn't affected by the deal. Maybe only
one elven house made the deal in the first place, and only their descendants are strong. Maybe their halfling has some gnomish blood in them from way back that altered their physiology. Maybe the human musculature has weakened over the centuries, but one or two super-strong-but-looks-fat halflings pop up each generation.