The correct answer is...
Sorta.
Magical armors and such will resize themselves to fit the new hero's body.
Magical weapons will not work for the new body if it can't normally hold them. The exception to this is if the weapon is enhanced with the "Opposable" ability, which is designed for this exact situation.
Spell magic items may or may not work. Wands and Staffs, spell trigger items, will still function normally for the character, as will use activated items.
Spell trigger items, such as scrolls, will only work if your DM will allow you to cast the spell normally (ie. He isn't being an SOB and saying you can't do somatic components anymore).
I think that about covers it.