if the replacement regulator off the smaller bike can't handle as much power or uses lower voltage diodes, it will fail. This could possibly cause the voltage to spike on your electrical system which could in turn cause your Igniter Box to fail or damage other things (headlight bulb will probably burn out). Most likely, you'll just be stranded.
If you HAVE to use a regulator that you're unsure can handle the power, ride with the HIGH beam on all the time. This will divert some of the load from the regulator to the bulb.
Your best bet is to check the electrical power output of the 250cc bike's charging system and compare it to the Bandit400. You'll have to do some searching to figure out their power outputs (it will be a WATT rating).
As far as the regulator getting hot, yes all regulators do get hot as it is their job to bleed off excess power as heat. The question is, "How hot?" I'm not exactly sure what the regulator is rated at, but typical electronics are usually rated to 50 degrees C.