Certainly hardy enough. I grow it fine in Buckinghamshire where we have a longer colder winter than you will get in South Devon. They are fine with indifferent soil, that is what they natively grow in.

It depends what you mean by small. Mostly they grow in the mediterranean where the regular summer drought stops them getting too large, and you encounter large shrubby forests of them at around 12ft tall only. But they are also native to SW Ireland, where it rains all the time, and they can be quite large, certainly 60 ft. Also depends on species; a neighbour has an Arbutus andrachnoides and it is very vigorous and huge, but a beautiful thing.

I grow a variety of Arbutus unedo called Compacta which said on the label it would grow to 8 ft tall. Well mine is only 8 ft tall, but only because I prune a good 2 - 3 ft off it each year, so I think it would be much bigger than that if I wasn't giving it a good snip every year. Compacta doesn't fruit as much as some others, unfortunately.

They can succumb to fungal diseases here in Britain due to the humidity. It is notable that the Irish ones are fairly straggly unlike the densely shrubby mediterranean ones. So make sure the air can get through to reduce risk of fungal disease.