I definitely don't see a problem with it, especially considering the diamond was originally a ring anyway, so you aren't dishonoring anybody's memory or anything like that by changing it.
I also think it's a wonderful idea to have your DH pay for the resetting so he can contribute to it, if he wants to, if not it doesn't really matter anyway.
My engagement ring is a .99 center with a halo around it. I have short, chubby fingers (I think I wear a size 9 ring) and I don't think it looks too small at all. In fact, I was very picky when my fiance and I were looking for my ring, because I didn't want to have a tiny ring that emphasized the whole sausage finger thing. *LOL*
What does your wedding band look like? That would help determine what the setting should be I would think.

My engagement ring is a .99 center with a halo around it. I have short, chubby fingers (I think I wear a size 9 ring) and I don't think it looks too small at all. In fact, I was very picky when my fiance and I were looking for my ring, because I didn't want to have a tiny ring that emphasized the whole sausage finger thing. *LOL*
What does your wedding band look like? That would help determine what the setting should be I would think.