It shouldn't be a problem for a decent gunsmith and several intrepid folks have taken it on themselves. Velocity loss would not a big deal, IMO, as it isnt a rocket sled bullet to start with. 16 1/2" barreled lever guns are pretty handy and ride well in the hand. Take a look over at:

http://www.marlinowners.com/forums/

for MUCH more on all kinds of lever rifles and search 1894 16 barrel or cut barrel and you will likely find tons of reference material.

DRC guns does lot's of fine work on Marlins and their rates aren't bad...

http://drcguns.com/index.html

I have a 1894ss that shoots 300 XTP's great (surprisingly) and I am considering the same thing but I may go to 17 or 18"...

See if your local gunshop has a 336 SDT (16 1/2 30-30 in stainless with a straight grip stock) or a 1895 GS (a 45-70 with an 18" barrel in stainless) to get a relative feel for shorter barreled leverguns. BTW, the 1894 action is 1" shorter than either the 1895 or 336. Caution though. Leverguns are addictive and a HELL of a lot of fun to shoot.

Patty