Linda, I have made the MMF with just the 10oz bag of mini marshmallows and it works fine. No adjustments were needed. The only thing is you wont use the entire 2lbs of PS as your blending it in.
The recipe I use calls for 1 cup of marshmallows, packed tightly to make the cup. I use a glass measuring cup (usually a 2 cup one). I add a tablespoon or two of water, then microwave it for about 30 seconds at a time, until it's a melted goo. (Watch out! It's HOT!) Then, I use a round glass casserole dish to mix it and the powdered sugar in (I use a spoon to start stirring it). It takes about 1 1/2 cups or maybe a bit more of powdered sugar. I stir in a bit of powdered sugar at a time, until it gets kind of like bread dough. I then start using my hands to knead it in the bottom of the dish. I'll add more powdered sugar as I need it, until I get to the consistency I want. My husband likes it much better than the pre-packaged fondant.
In response to the above question, I would think 16 oz of regular or mini marshmallows would still be the same amount, when melted down, as that is the weight of the product, not the volume. I use mini marshmallows, though, as they seem to melt quicker and are easier to stir. =)
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