I did some research and it said I would have to change the capsule component into a pawn to do this? Would this be a big problem with animations, controls, etc.?
This cannot be done because the capsule component is inherited from its base c++ class, which is not editable unless you are working with the engine source. Your best bet is to create a new pawn from scratch, then you can add your own collision component. You would have to use pawn because the character class inherits the capsule component, where as pawn does not. Although I would not recommend doing that, especially for movement, as a box collision will not be smooth, it will get stuck and hung up on geometry. This is why the capsule is used. It does not look bad in your video, maybe you could do some tweaking of the size of the collision?