I've heard similar to that. If the pellet is too big they just end up breaking it into smaller pieces and wasting more. They tend to enjoy it when it fits their beak size.
I used to do that all the time as well! Jack would always have loads of pellet dust in his dish, so I saved it, storing it in the fridge. Then once I had a cup, I would use the pellet dust instead of flour in my birdie breadI save the leftovers to stick in the birdie bread too, all other waste goes to the wild birds in my garden, who gobble it all up with gusto