never saw that rule enforced. In every game I ever played even with the boxed sets a few friends wanted to try halflings were just short people . Never even noticed the lack of halflings in that. I'd bet that was a mistake but who knows there were some wierd rules that only made sense to the persons that made them.In OD&D, Halflings could not be raised if you strictly followed RAW. Raise Dead in Men & Magic reads: "Raise Dead: The Cleric simply points his finger, utters the incantation, and the dead person is raised. This spell works with men, elves, and dwarves only. [...]"
Given that Halflings were... not great... however, I wonder how many tables were that strict about it.
I don't see any correction or alteration in Greyhawk.