That's obviously an extreme example.
Ultimately it's the engineer's job to make good decisions.
No, I think that's missing the point. Sure it could be larger, but presuming you are trying to optimize the experience, there is nothing that would require doing it server side.
Why would the total payload needed to render the page client side _have to be larger_ than if it were client side? Unless you are talking about rendering an image with client side logic instead of sending a PNG/JPEG (in which case, sure, but that isn't what most people are talking about), I can't quite see it.