Dressage saddles do fit smaller. Normally you go up in size 0.5 to 1". The deeper seat gives you less "sitting" room. A 16.5" would fit a child or very petite adult (28" inseam and shorter, and a jeans size 2-4 or smaller). 17.5-18" is actually a very common dressage saddle size for women.
You do need to ride with your stirrups longer. Start with just 1-2 holes longer. Work on opening your hip, bringing your leg back, and really relaxing into a back and "open" position. Your back needs to be straight with the top of your pelvis tipped back (you'll feel more weight on your seat bones).
Before you start your ride, drop your stirrups and do some "loosening" exercises. First rotate your ankles in circles, both directions. Then swing one leg from the knee down, then the other. Next, put one hane on the pommel and swing your whole leg back and forth, keep a very slight bend in your knee when you do. Finally, gently lift your whole leg out away from the saddle.
Do these exercsises first standing still. As they get easier, try them at the walk. Be sure to keep your position steady, shoulders relaxed and back, hips open, pelvis tipped back. You should feel a slight stretch at the front of your hips/pelvis. You'll notice your stirrups "feeling" too short. Lengthen them every few rides by a hole. You should end up with your stirrups so they are right at your foot's heel (just a hair above your boot heel).
You heels do NOT need to be "down" for Dressage, level is actually better as you can cue the horse easier and your leg is more relaxed. When you force your heel down, you tense up your whole leg and close your hip angle.
Your girth buckles should be just above the elbow if your horse. You should have just a little space between the top of your girth and the saddle sweat flap (the one against the horse), about 2" of horse exposed when fully tightened.