Good morning. I posted this on the Materials Engineering forum and didn't get many bites. I'm hoping it's O.K. to try to direct traffic to it from here.
From what I recall those minimum penetration limitations are just minimums to ensure the applicability of the yield limit equations.
That said, I think you'll be surprised to see that assuming a smaller diameter lag screw for the same application may actually give you higher reference design values because of those limitations.