I think Traycor's ideas are very sound, and exactly what I hope to implement in my own games. Curly hair, worn ostentatiously, is a simple and effective art direction idea. Large heads and other features to show scale are also a very good idea. And the "pirate-y" look, with bandanas and such, is brilliant as long as it's not taken too literally (as some people are taking it in this thread).
The "aye-aye"-inspired look is a fun idea and good art, but a little too far from human to jive with my concept of halflings. At some level, halflings should look a little like human kids -- the idea of plucky, optimistic, fearless little warriors has always been based on archetypes of the child hero.