Terrine shrunk during cooking
Actually, it sounds like everything went right to me, that's a classic terrine. You simply picked the wrong recipe if you don't want fat - 1/4 of it is lard after all. When you cooked it the fat melted and got squeezed out to the sides, that's perfectly normal. 

If you want less fat then replace fat with gelatine which will solidify to hold it all together.