Son's college team had a "5'8" and under" club last year - five members. They all contributed to a winning team.
Will it limit the number of schools that will look at him? Probably, but it depends on how much talent he has. If he is looking to be a pitcher, he should be focused on improving the 80-82 and not worried about what he can't control. If he wants to be a position player, focus on being the best hitter and fielder he can be...
Also, the good GPA will earn him more opportunities. There is far more academic $ available than athletic. Many of the better academic colleges are D3's and NAIA's that are sometimes a bit more likely to have smaller players on their rosters. But the talent still needs to be there.