In the Jeff Dee picture, the halflings are 4 "heads" tall. That marks them as short, even to someone who knows nothing of proportions. They just "feel" short. The human, otoh, is between 6 (normal) and 8 (heroic) heads tall.If the tall person was not in that picture, what would distinguish them from humans with hairy feet? That is the issue. How are they distinct on their own? I would lose hobbits from the game, frankly, because hobbits are LotR specific.
I'd like to see halflings stand a couple of inches taller than that: 3'2" + (2d4)" for an average height of 3'7" (= 43"), with a height range from 3'4" to 3'10" -- still shorter than most dwarves, but not by a whole lot.
One edition's PHB (I forget which; was it 3E?) stated that halflings average about 75% of the average human height. I think an average halfling height of 43" would come fairly close to fulfilling that.
Tyrion Lannister is the Half-man, not the Half-Mountain, despite being closer to half the height of Gregor Clegane than half the height of the average man of Westeros.
And I am pretty sure halflings would not really define themselves as half a human. It is best to assume it just a name, not a literal description.