This whole conversation could have been summarized with a single
response:

"LyX only does what LaTeX does.  If you don't like the defaults for
math typesetting, See a good LaTeX/TeX book for details.  Look for
info about *why* LaTeX typesets fractions the way it does."

Any good LaTeX book discusses the difference in font use and font size
reduction in fractions, nested or not, inlined or in an "equation" block.

-- 
John Weiss

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