There's nothing inherently wrong with making a "really small" batch. It's just that wine takes so much time to make, you might as well have something left over when you are finally done. 1 US gallon is about 5 750mL wine bottles. Therefore a quart is 1 and change. When you finally open it, you'll have nothing left to age. If you're lucky and it's actually good, you just blew yer wad.
Also, using really small containers makes racking a challenge, as you always lose some (maybe 10%) when you rack off gross lees. You really need some decent volume to make up for that reality.
That's a non-issue. The yeast packets are "enough" for 5 gallons, but they are not an exact measure. Just sprinkle on the surface of your container, whatever the size, and you should be okay.
Roger Quinta do Placer