Wouldn't a larger ID beer hose work the same way to balance the system.
yes it would. but sometimes going up one size will reduce your restriction too much. or it means spending $$ to replace all your hardware and beer line with a different size. or it means you would have a lot of pints worth of beer sitting in your line, which isnt really a good thing.
nitrogen solubility@ 0C = 0.03g/kg
CO2 solubility @ 0C = 3.35g/kg
putting nitrogen on your beer realistically only effects the pressure at which you serve. nitrogen barely disolves into the beer, so the direct effect it has on mouthfeel or bubble size is very small. the "guinness effect" mainly comes from being able to push the beer thru a stout faucet at a much higher pressure than you could on pure CO2.
you can get many different mixes of nitrogen and CO2- really anything between 0/100% and 100/0%.