Forget the auras, that's nothing.
Dealing two d12 damage with a greataxe is a huge deal, however. They can't introduce large characters because they would completely overshadow every Half-Orc Barbarian and Dwarf Fighter there is.
Grappling would be even worse. Nobody would EVER create a medium-sized grappler when large ones can grapple Huge monsters.
Squeezing would of course be a small price to pay, but still a nuisance.
This I think is the first and only real reason we don't have Large PC races.