>Is there a practical limit for how small I can make the
>current sense resistor?  At what point does the Op-Amp
>become unstable with regard to small input voltage
changes as I lower the load sense resistor?

You can make the resistor as small as you like. Essentially the limit is the
resolution of the drive signal for the control signal, and the noise
performance of the whole system compared to the resolution you want.

>At 1 ohm and maximum drive, 2.5V is lost through the current sense

Ouch 2.5 watts is a fair bit to dissipate here.

>I'd like to move to .5 ohm or lower if possible.

I would be looking at 0.1 ohm or smaller. Your biggest problem is finding
resistors with a low enough temperature co-efficient for the output current
to remain stable at a given input level.

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