Instead of recalculating damage for a pet, make it an additional party member with an HP bar and target-able. Obviously an actual PC will always be better, but sometimes people DC or you can't find that 8th person. This would be a way to fill in the party.

Nobody has to be nerfed. 4 people can become an 8 man party, but an actual 8 man party will always be a better fit, because pet's don't fully fill in for a person.