Not an electrician, but a CB will trip on a surge? That may be needed to be taken into account.
You say typically you are drawing 3.5 amps at 120 - less than half a kilowatt? Not much load for a diesel!!
Maybe you should be looking at protecting the engine rather than the gen head as it will be engine limited - if revs drop, voltage will drop and so will amps, so I2R losses may not be a problem with an over-rated fan (for the engine limited output) on the oversized head. You could be 'black smoking' that engine without anything tripping.
Not really sure why you would want a 'master' breaker in that situation. A switch would suffice as it would only trip on a serious surge.
Further, not knowing what you are actually wiring for is not too helpful as there may be other over-riding considerations too take into account.
So you have a generator which will cope with a 7.5kW surge and 5kW continuous and an engine that can deliver little over 3kW continuous. If all your loads are small, they will be taken care of by your 'slave' CBs? how many outlets? If they add up to less than the master you are simply protecting a very short length of wiring (assuming it is all in one panel) and they (one of them) should trip before the master anyway?
Conundrum.
Regards, RAB