Conventional free electron laser (FEL) oscillators minimize the optical mode volume around the electron beam in the undulator by making the resonator Rayleigh length about one third of the undulator length. This maximizes gain and beam-mode coupling. In compact configurations of high-power infrared FELs or moderate power UV FELs, the resulting optical intensity can damage the resonator mirrors. To increase the spot size and thereby reduce the optical intensity at the mirrors below the damage threshold, a shorter Rayleigh length can be used, but the FEL interaction is significantly altered. A new FEL interaction is described and analyzed with a Rayleigh length that is only one tenth the undulator length, or less. The effect of mirror vibration and positioning are more critical in the short Rayleigh length design, but we find that they are still within normal design tolerances.