In some of the more recent D&D games I've run, halflings have used the following backstory:
Sometimes human children stop aging just before puberty. No one knows why it happens, but presumably it involves dark magic. These children (called "halflings") are typically run out of their native towns and villages and left to die in the wild. Some of them survive, joining wandering halfling gangs. In these gangs, haflings tend to regress, becoming feral or outright mad. Some halfling gangs will attack human settlements to kidnap their children. If the children age beyond the "halfling age", they're then killed.
Not all halflings are murderous lunatics, however. Some families refuse to cast out their halfling children and continue to raise them in secret. Other halflings may find friends and new family once cast out of their home communities. These halflings have as much chance to become sane, productive (though diminutive) adults as anyone else, though they will still face tremendous prejudice from most humans. Pretending to be proper children may blunt this prejudice, but humans are always wary of preternaturally mature children of "halfling age".
These halflings do a good job of fulfilling the "Children of the Corn", creepy adult-talking child, wild boys, and Peter Pan archetypes, and absolutely NO ONE would confuse them with hobbits.
