Using 1/4" tubing isn't a big deal if you've got a system designed to use it--there are European systems that get good results with 1/4" tubing in low pressure, low flow systems. But, it becomes a big deal when you take components designed for use with larger tubing and a high pressure, high flow system and then try to use them with tubing that just can't supply the water they need for effective cooling, which is what it sounds like you're thinking of doing. A water cooling system is a SYSTEM and if you want good results you can't just mix-and-match design philosophies. I think my best advice right now would be to suggest you do a search on tubing size here and at Procooling and read some of the discussions.
Oh, and a reservoir in and of itself doesn't make any practical difference in the effectiveness of the loop.