Is a 26 inch drag radial too small for my setup?
 

I plan on making about 750-800rwhp with my turbo rcsb Silverado and I already have a brand new set of MT ET Street S/S drag radials that are 255/50R16 which is a 26.4" tire. Am I going to have trouble hooking up with a shorter tire like this vs say a 28 inch tire? My rear gears are 3.42 and my converter is a Circle D 1B 2700 (more like 3400) stall.

1/8th mile it will be fine, 1/4 you will probably run out of gear on the big end

Do you think I will have problems getting traction with the shorter tire?

It will be harder to launch because you have more mechanical advantage with a shorter tire, same thing as running a more aggressive gear.

Also shorter is less footprint for same width.