Very interesting discussion. Many good points IMO.
Yes, the average height of a Major League pitcher is more than the average height of the general public. The taller pitcher does have certain advantages.
That said, there is nothing stopping the shorter pitcher from becoming as good or better than all the tall pitchers. Pedro Martinez was the most dominant pitcher in the Big Leagues for a spell.
The fact is the shorter pitcher has to be special. This is not just a MLB issue, it is a baseball issue. At nearly every level starting at around 14 years old, you can almost pick out who the pitchers are when they walk in the park. Just pick the tall guys and you will be right most of the time. Then you see a young Sonny Gray, Marcus Strohman, Rob Kaminsky, etc. and you find out that they are much better than most all the tall guys.
So we know there are more tall pitchers than short pitchers. What really counts the most is not the size, but who is the best. Let's face it, they are all bucking the odds of pitching in the Big Leagues. Sure there are more tall guys that make it. There are more tall pitchers on every minor league roster. There are a lot more tall guys that don't make it, also. The shorter pitcher needs to be special, so does the taller pitcher.
So back to the original question... "How short is too short". The only answer is we don't really know for sure. How did Billy Wagner throw a baseball 100 mph? Would Pedro Martinez been even better had he been 6'5"?
Bottom line, we have seen a change in thinking over the past 20 years. Back then there were clubs that instructed their scouts to never turn in a RHP who was under 6' tall. Then we started to see RH pitchers under 6' tall winning Cy young awards. That tends to change the thinking! Now we see 6' and under pitchers going in the first round.
Still, the big guy has an advantage! He is easier to project. He fits the mold.