Does this mean Rey should never win a match then you know cause he's all small and shit and Big Show should never lose?
Not really, you're concentrating on the 'midget' part too much.
But did I 'buy' Danielson beating Big Show and Mark Henry? Hellfuckingno. He looks like average man on the street, someone who would work behind the till at a Subway. If I think I can fuck him up, why would I buy him as a World Champion in a company full of giants. He's a 5ft 3" , probably not 100lbs when wet, straightedge vegan (how much of a pussy does that sound?), and hes beating a 300lbs powerlifter black man. Think about that for a second.
At least they've got the hint and had him pick on people his own size, namely AJ. That's a believable feud for him to go over in, I could buy that. It's just a matter of suspension of disbelief.
He'd be a great jobber to the stars on nXt or something, but IDK why hes being pushed so much.