- About the hitbox; yes. We usually prefer smaller hitboxes for anything that hits the player (and bigger for any attack from the player) rather than the opposite because it will feel unfair if an hitbox is too close to what we see (especially because the hitboxes are moving). The player is more likely to forgive a favorable outcome and more likely to feel frustrated if the unfavorable outcome is frequent. Especially if the hitbox is a square (it often should be)
- About the spam fire, you could make the light decrease as the bullet travels space  to avoid that. But the lack of visibility feels like it's downright impossible to understand what's going on. An alternative solution would be to have a "cone" of light in front of the player. It could fade a bit, but the idea would be to let the player "control" some of his visions. That way, it's more interactive, but still scary because you can't light every place. Think of Doom 3 and how light plays a role in this game.
- About reloading, yeah I personally think R can never be a restart button for shooters. It's in our habits to consider R to be a reload button. In any case however, Restarting should often be an uncommon key or simply in the menu. Unless the game makes you very likely to restart of course, in that case R can be fine. Maybe still not in shooters though.
In game jams, it makes sense that the restart button is not in the menu though, since it works a bit faster; but still be careful about the restart option :p
Also note that if the reloading takes time, it can be a good idea  to let the player reload at will so that he can preemptively not have to deal with a reload in the worst moment.