The size of the bicycle wheel doesn't matter with a bottle dynamo. The tire tread moves past the dynamo wheel at the speed of the bicycle over the road so this speed is independent of the tire diameter. (OTOH, a hub dynamo should be designed for a particular rim/tire size since a smaller tire will spin at higher rpms for the same bike speed.)

I use fairly slick tires and have always positioned the dynamo wheel to run on the regular tread part of the tire, not on the sidewall (never had any tires with a generator strip on the sidewall). Haven't had any issues with getting enough light under rainy conditions, but snow and ice did cause problems.