6packmike: Definitely smaller.
Here's 6packmike's lip out in super zoom and super slo-mo:
The action looks fine to me. The ball lips out because it was moving too fast IMO.
Looking at frame 3 of the animation where the ball appears to be inside the cup.
What doesn't look OK to me is the relative sizes of the ball and cup.
A ball is 1.68 inches in diameter and the cup is 4.25 inches. The cup is 2.53 balls wide.
I overlaid the width of the ball shown over the cup below.
The cup shown is almost 3 balls wide! Not two and a half balls wide.
Assuming the ball width is shown correctly then the hole is shown as too wide.
If we assume the cup width is shown correctly, then it follows the ball width is shown as too small.
Either way, I think it optically makes us think, more often than we should perhaps, that the ball should have fallen in the cup. Kinda, sorta, like an optical illusion.
All that being said, what is really important is not what is shown but what is calculated in the physics engine. Nothing here makes me believe the width of the cup and ball are not correct in the calculations.
It could be that back when the program was in its infancy the cup and ball width ratio was shown correctly. And possibly someone thought, "that doesn't look right to me, the ball seems to big, change the scale on the ball and make it look a little smaller."