My 5" die cuts perfect 5" squares also! I have never made a Jacob's ladder so I don't know about whether the smaller squares will work or not. Someone will come along and give you some good advice.
I was cutting 2" charms with my value die and they were coming out perfect. Then I noticed that one edge was coming out wonky. After I examined the die closer, I noticed that the blade cutting the wonky side was bent inward. I had cut using only 6 layers. I emailed Accuquilt and explained what was going on and they sent me out a replacement die free of charge.