I’m not sure an iframe here can properly resize the video.
Style attributes are stripped out from the <iframe> tag, so setting sizes here won’t have any effect, unless you add the CSS in your own theme. But it won’t do magic.
If you set the iframe width to 100% of the post container, it will render like this:
And you can’t set an automatic height that will depend on the video’s ratio.
I think there’s no straightforward solution other than using the small video (don’t put the <div style="position: relative; padding-top: 56.25%;"> part as it will be removed when you post anyway), and people who want to see the video in a larger format will click on the fullscreen icon on the bottom right of the video.
You can also post on feature to ask if a onebox support for Bunny stream videos could be made, but unless there’s a high demand (which I doubt), it will likely belong to the pr-welcome tag, which means that the team won’t add the feature themselves but anyone with a bit of coding knowledge is welcome to code this feature so it can be added into Discourse eventually.