There is no bug here. Part of this mod is Privateer's 'Turm Emblems your way' mod.
Basically, it turns your whole conning tower into a canvas to paint your emblem on.
I believe if you look into the documentation that came with the mod, you'll find instructions on how to make a smaller emblem. There's a template .tga file somewhere in the mod that you can paint on. It's just a matter of rescaling the picture you want to have as your emblem.
This is the link to Privateer's original mod with an explanation on how to use the .tga file:
http://www.subsim.com/radioroom/showthread.php?t=149906