So, it's regardless of size. So, in theory can I:
1. Reduce the size class of a long bow down to small and thus make it one handed? (the answer is obvious, but it builds on the next point.)
No. It needs at least two hands, regardless of size.
Edit: To clarify, it would be a one-handed weapon that still needs two hands to use (see below).
2. If I can't, because the hand number is two hands regardless of size, is there any upward limit to how big I can make a bow? (As long as I'm willing to suck the -2 per size class, that is. A -2 to hit for base 2d6 damage might be worth it. that's a jump from 4.5 average to 7 average damage.)
Still can't. It doesn't say it needs exactly two hands to wield, it says
at least two. Nor for that matter does it say that using two hands is sufficient to wield it regardless of size. It's just an extra condition. If you somehow made yourself treat a bow as a light weapon, you'd still need two (or more) hands ti use it.
Further, by the weapon size passages you quoted, we need to determine the new weapon's designation to determine if it's wieldable. Assuming it's a two-handed weapon when properly sized (most projectile weapons don't explicitly list their equivalent categories as such), the increased size category would change it to something other than light/1-h/2-h, and thus rendering it unwieldable. But if you could wield it (Strongarm Bracers/Monkey Grip type effects), you'd need at least two hands.