Sorry, I see threads like this popping up everywhere. I don't care for the height restrictions, however the thing is is that this is NA server. NA server don't see short cute characters how the rest of the world see them, furthermore art is mostly real to most people. If you draw something that is fake that looks like something, it'll be labeled with regarding that image. Because Loli is associated with bad things, it is considered bad. You want your answer? it's because they don't want to look like pedophiles or enabling pedophilia, which imo they are automatically calling anyone a pedophile that wants to be short and cute, like most people do in any games.
The Devs make cute characters and you play that cute character because you like how cute it is? You're a pedophile by association, even if you're just as short in real life. None of these beings are real but the fact that people take art seriously is real and you're asking an obvious question. But It's anime, anime community is heavily attacked and controversy stirs a big pot. You'll find American Animation to be more settle and calm, if you play on a game that is American and they were child like, you'd have less worry about being called something you're not just because you're playing it.
You're playing an anime based game, Asian game and NA and EU don't like the fact that you're doing that stuff, not to mention the many people who actually RP as children makes it much worse for you. Even if the character isn't real, the person behind that is real making it more difficult for them to accept a short small character. You can be short all you want on other games and have big boobs, big butt and still be called a lolicon and a pedophile.
Also, the word Loli is a problem in itself because the MASSES see it as meaning a child, underaged character so couple that with people actually ERPing as children behind that makes this look bad even if you don't see your character as a loli. If someone points out that you are a loli, no matter your age and it's usually because your height alone, you can look really adorable at any height but being short is worse, then people will see you as a loli. You need boobs, curves, be tall to be normal even though there are adults that are petite and short.
I'm sure someone will get upset at this and will say some ridiculous stuff because I'm saying this but I've seen a lot of people in my life and experienced a lot more than you think and I don't think that you have even experienced a lot of the world yet. The average height of a Japanese woman alone is 5'2" Short.
And many women from Japan do look really young for their age and most Asians as well, this is why these anime characters always look like this for the most part. Asian people have a youthful look even the taller people there so you'll, no matter what height you are, look young on most Anime types of games.
It's the use of the word, mainly. Japan didn't coin that word, fans of anime coined that word and it's associated with bad things and because people analyze that word, it is assumed that it comes from Lolita which is a novel about a seductive precociously seductive underage girls. So the reason now you have several reasons why you can't be short.
Since no one can determine your age and you have the potential to act out like some sort of ERPing fool, which in this game has many, you're not allowed to be shorter because of the fact that the game developers know that people ERP alone. If some Americans weren't so gung-ho about banging something small and adorable and calling them loli and acting like kids behind that character, you wouldn't be asking this and people wouldn't be in this mess.
The real question, to me, is why are there ERP here in the first place? there is no sexual items here, you can dress sexy and have all your pole dancing all you want but you're not going to get SL, LoM, Scarlet Blade, 3dxchat, VRchat levels of adult here.
Also, a lot of these outfits aren't that adult but people treat them as adult because the human body is a sin to behold and not a natural thing. You show more flesh you're not normal and well behaved. If I wore shorts and a tank top because it's comfy, I'll be considered someone easy or something just because I like my body to breathe.
So there you go, these things that some people do, You're in NA, you have people that make short people look bad you have youthful looking characters, you're actively calling them underage while you're trying to make a statement, other people are calling them that no matter your age and your character's age and there might be actual underaged people playing this. You're not going to lift height because of most of these issues and NA have different views and opinions on things.