You're talking about people who might *almost* be dwa--uh, Little People, but aren't.
OK, so any arbitrary height limit may be wrong in some cases: What you, Greg, are talking about is a "physical abnormity" (caused by hormones or hormone deficiencies and stuff); the girl Thane (and most of the rest of the gang) was talking about, OTOH, is apparently one of those "physically normal" people who just *happen* to be at the extreme lower end of the "normal" spectrum.
Witth that definition, I can well imagine that there are actually some dw^H^H Little People who are taller than some "normal" people. Weird, innit?
Anyway: I think the girl Thane was talking about would be just a "very little person", without capitals, as opposed to one of the capitalized "Little People".