I have been trying to track a different, though similar, bug with enchanters' racial illusion haberdashery.
http://www.project1999.org/forums/sh...ad.php?t=39465
I believe the ENC race illusion problem is caused by the game (either client or server) not storing information properly to display my illusioned race to other players. Since when you compared your height to a dwarf and you came up to eye level, you may be having the reverse problem and the game (client or server) is not storing graphic info properly to view yourself at halfling-height. I feel it may be telling your game client to set your base displayed height to that of the incorrect race. As referenced in my illusion thread, races are identified as a model attribute in EverQuest according to an assigned racial number.
I just ran around East Commons for a bit as a female halfling warrior, and the height display bug affected me too. As you have discovered, I was able to fix the issue by getting transformed into a wolf and then dropping the illusion. After you reset your natural height with Treeform, does it ever spontaneously return to the slightly-enlarged state before you zone? I ran around for about 10 minutes and did not experience a re-bigulation.