Actually, it won't reduce airflow, it would just increase pressure.
The air isn't going to stop flowing (assuming the fan keeps working at the same rate), the air will just be "compressed" into a smaller area (increase in pressure).
Since you may have an 80mm fan pushing 35cfm, or you can have an 80mm fan pushing 50+cfm (delta screamer), a 120mm fan pushing 60cfm isn't going to have any problem either, even in the small space, pressure will just be greater.
This is assuming you have a "seal" between the new fan and the heatsink (like a duct or adapter) so that the air is forced onto the heatsink.
If you are sucking air away from the heatsink, then I would imagine there would just be a greater vacuum effect which would increase the amount of air sucking through the heatsink fins (as you would expect from a higher cfm fan).
I can't see any way, with a good adapter/duct, that you could lose any airflow, assuming you had a decently rated 120mm fan.
Dell also does an OK job cooling its processors with ducts at the back of its cases.
I was thinking of getting an adapter from 80mm to 92 or 120mm for my CPU, when I have the money, to keep the noise down.