Breeding ewe lambs out of ewe lambs out of ewe lambs is a program for breeding bantams long term. Fine if you don't want a high mature weight anyway, but then you're extending the days to slaughter, unless you're relying on the ram for that, in which case you're putting a bigger ram on a smaller ewe...
As long as those lambs aren't stunted,
Exactly. One off ewe lamb breeding may not, but breeding from their lambs and lambs of their lambs will stunt them. In nature these are the most vulnerable members of the flock next to the old ewes. Less of their offspring get to the core of the flock but those that do (from either side of the spectrum) have really proven themselves. You're removing that selection pressure.