Ond_kajaDustinSOnd_kajaHitbox =/= bounding box
Seems to be a bug with the needlegun that it reacts to the bounding box rather than the hitbox.
The bounding box is used for all projectiles as far as I know; try it out for yourself with the command. Let me know if you get different results with different weapons - I used the needle gun as it does a small amount of damage compared to a lot of other projectile weapons, and makes for a very clear way to demonstrate the boundaries of the hitbox.
Yeah, it seems to work for all projectiles except sticky launcher. I guess it's like this because of performance issues - theoretically it's easier for the server to calculate collision and splash damage this way. Practically, it's not a huge issue, it makes directs slightly easier to do, but the most empty bounding box space is at head level, and obviously it makes no sense to aim at headshot level unless you want to deny someone from surfing your rocket. Although it would be nice for more accurate hitboxes.
A cylinder would work well, but the main problem with that sort of change is that the shape of a player's collision has been the same since HL1 and Quake before it - while the method is definitely dated, changing it could have unintended consequences. The change would have a very small impact on performance, but these days that impact would be negligible. The decision to implement player physics as an AABB (axis-aligned bounding box) was originally made in the late 90s, where bandwidth and performance were very limited resources.
I would say that it's a pretty large issue, as it changes your apparent size greatly depending on the angle you are being viewed or attacked from. This definitely plays a huge role in how often projectile weapons hit, and the nearly invisible nature makes for a huge source of inconsistency.
I just tested what you said about stickies - that's really strange behavior. It seems to collide with the actual model, instead of a simplified bounding box.