Of the examples found in tradition that contain the verse (including the earliest-printed full example, in Notes and Queries, 1905), the line is usually "Some drops of rain did fall". "Small hail" occurs in a text from the Evesham area said to have been current in the later years of the 19th century (Roy Palmer, Songs of the Midlands, 1972, 113) and in an unprovenanced example in Lloyd, Folk Song in England, 1967, 124-5. Maddy Prior recorded an arrangement of the set in Lloyd. Peter Bellamy reckoned to have learned the song from one Audrey Coppard, but whether that was a set direct from tradition or out of a book I don't know; he didn't say. On the whole, I'd tend to put the "small ale" down to Peter's pronounciation (he dropped "h-" a lot when singing, though far less so when talking); that way we don't have to worry ourselves with ingenious but probably unlikely explanations.