Except that halflings, no matter what you may think, are not human. There's actually enough to them to maintain a separate identity from humans. The fact you don't like them doesn't change the fact that they are a not-human race of people.
But they are human, in all but mechanics. Their name even refers to them being half the size of humans. In Tolkien's works,
halflings were a type of human (or at least very closely related to them). They're human in culture (primarily farmers that are typically most friendly with individuals/peoples that they're familiar with) and human in appearance (they're literally basically just humans but 3ish feet tall, and humans of that height exist in real life). They're as human as any of the D&D races get (excluding humans, of course). People were even joking earlier in the thread that they're more human than humans in D&D.
I don't claim that they're basically just human because I dislike them. In fact, quite the opposite, as I detailed in the OP. One of my main reasons for disliking them is that they're basically just humans, but short. Stop with the strawmen, please.
There have been... 219 pages of people explaining the differences. If you don't like those differences, fine. If they're not enough for you, fine. But those differences do exist, whether you like it or not, and people who are not you like halflings. Why should your dislike of them--when they cause neither you nor your games any actual harm--mean that other people don't get to play them?
Have you read the last 220ish pages? It was almost entirely people bickering back and forth over minutiae and tangents not related to the core of the OP. Some people did explain how they're different in their world, like
@Oofta describing them as being the "happy people of the world, like Scandinavians" (who are literal nations-full of humans), and others describing them as just farmers (which has been the primary human profession for thousands of years in our history). I pointed out that most races have things that differ them from humans in significant ways (like elves and gnomes being related to fey, warforged being constructed, dwarves being resistant to poison and having darkvision, orcs having powerful build, yuan-ti being immune to poison and magic-resistant, dragonborn having breath weapons and damage resistance, animal-folk
being animal people, and so on), and most people just ignored that and continued to say "Well, most races are just humans anyway!"
Halflings are more human that any other race in the game. It doesn't matter if they fill the cultural niche of being farmers, because that's something humans already do in most fantasy worlds and in the real world. It doesn't matter if they're "happy people", because Gnomes already have that as one of their core defining personality traits and Humans have that in multiple real world nations.
A Small human is not the same as a halfling.
I'll let you go ask JRR Tolkien if that's true. (I mean, you pretty obviously can't, but it's also pretty obvious on what Tolkien would say if asked on the matter. I'm willing to bet that he wouldn't include Small humans and Hobbits in Middle Earth, because they might as well be the same thing.)
It's also questionable if owlfolk or rabbitfolk will be lineages that can be templated on a race, or completely new races. Especially when the Fey Folk UA actually called them "race options" and didn't say they could be put on another race; just that they can be customized via the Tasha's option.
They're going to be races. I don't see any reason why they would change the UA's Size of "Medium or Small" between its release and official publication, especially due to the fact that Custom Lineage and Dhampir, Hexblood, and Reborn characters have the same option, while being lineages. Owlins and Rabbitfolk will be races, not lineages, as lineages in 5e are something you can become instead of having to be born as it, but people are born as Owlins and Rabbitfolk.
If Humans were treated in the same manner and just had the "Size: Medium or Small", that would practically invalidate the core reason halflings exist in the game.
And here you can see that there are, in fact, mechanical differences between halflings and humans.
Mechanical differences that were added because the people that added Halflings to the game wanted them to be mechanically different. Halflings didn't even have Lucky and Bravery based features until well after D&D was originally published. For all intents and purposes, Halflings were Hobbits, and Hobbits were Small Humans.
And in case you missed those last 219 pages, a lot of it boils down to this: the Forgotten Realms, which informs a great deal of 5e, did a bad job with halflings. But other settings have done quite a bit with them and made them very interesting.
Your issue isn't with halflings. It's the way the Realms (and Greyhawk) failed to use them. And go read those 219 pages because we've already said what needs to be said about Eberron and Dark Sun and I doubt anyone here wants to repeat themselves yet again.
And the Realms is the core setting of the game, and it influences how Halflings are used in the PHB, which them influences how they're used in new settings.
Letting humans be either Small or Medium is one thing--although considering the mechanical penalties involved in being Small (such as inability to use Heavy weapons without a penalty), a Small human is still weaker than a Medium human, which I don't think is really what you want to say. If you give them special abilities to compensate for the weaknesses of being Small-sized, then you are othering or exoticizing people with dwarfism. If you don't give Small humans penalties for being Small, then you better have a darn good reason why other Small races do get that penalty.
Are you serious? Really, are you? Because if you are, how is it more of a problem to say "Small Humans have a hard time using Heavy Weapons" than it is to say "All Small Races have a hard time using Heavy Weapons"?!?!?
How is saying "people who are 3 feet tall have a hard time using a Greataxe" "exoticizing people with dwarfism"?!?! That's like saying it's "exoticizing people with Gigantism" to allow Giants to use Large-sized weapons.
If you create Small humans as a subrace, then you would have to create other human subraces--otherwise you're still othering little people as some exotic breed; they aren't "regular" humans. And if you create other human subraces, what would you base them on? People with gigantism? Would you get rid of goliaths as well? Or would you base them on different human ethnicities, or different types of disabilities? Yeah, there's some cans of worms waiting to be opened. Would you base them on completely fantastical concepts, like flying humans? In that case, why are little people the only real people who get this special treatment?
I am ignoring all of this, because I already said that I wouldn't make halflings a human subrace. Just let humans be Medium or Small, like Owlfolk or Rabbitfolk, and you're fine. Stop trying to paint something as problematic just because you don't like the concept. It's highly offensive to both me and the groups of people you are trying to speak for.
Except that they're not creating a new race of bullgrunglis. Sure, they could create a frogfolk race with three subraces--but they didn't do that. They created a grung race, and they're not going to say it doesn't exist just so they can create frogfolk.

I know they're not. I know that. You don't have to condescendingly explain that to me,
@Faolyn. My point is that people wouldn't be complaining about that if there wasn't 3 different Frog People Races in the first place! If Frog People were Frog People and there weren't 3 different types of them, people wouldn't be complaining about that.
And none of that has to do with the fact that humans and halflings are different races.
But it does, because Grung, Bullywugs, and Grippli all have the same general thematic niche (Frog-Person), and Humans and Halflings have basically the same one, too (Human, but one of them is Small).
I'm just pointing out your plan hinges on being incredibly insulting to a large group of people for absolutely no reason other than that you don't like a particular D&D race that no one is forcing you to use.
Again, can you stop speaking for Little People (the preferred term for people with Dwarfism), because unless they have assigned you as the Official Arbiter of All Things Related to the Representation of Little People in D&D, you're not allowed to speak for them and what they would consider offensive. (Which as a member of a marginalized community, I can say that it is highly offensive and very often harmful for people that aren't members of the marginalized community they are speaking for to attempt to speak for us. If you need a specific example,
here you go.)