3 lb Brisket, too small?

Sure you can. Just keep it moist and watch the temp!!
I would do it fat side down too.

That's pretty small and if not very much of a fat cap, make sure you go low and slow. I would smoke it at 225. I also marinate some of my flats and even inject them. I use either Mojo or Italian dressing. I would suggest you do the same so you can keep it from drying out too much. I marinate for at least 24 hours. With a small flat like that, put it in a gallon size zip lock bag, whatever marinade you want to use, get rid of as much air as you can and put it in the fridge for 24 hours.

The other thing that you may want to try is putting/covering the top of the brisket with bacon when you smoke it to keep some fat content in there. I've never tried it but it seems to me it should work. So, whatever fat cap there is, put that down. Put bacon on top. Take to 180-185 internal and slice her up, against the grain of the meat.

Worst comes to worst, you can always go to Smith and Wolesky's