Part of Frostgrave's genius design is that JM has kept the background fairly vague and he's avoided different stat lines for different races. These elements simultaneously make the game a bit more balanced (a Templar is a Templar) AND encourages players who are deciding on model selection to unleash their imaginations (SRBA's Mind Flayer warband is an excellent example of this). With that said, I think that halfling or goblin themed warbands are brilliant and should be encouraged, but if a model's size is used to a player's advantage (e.g. complete concealment behind a low wall), without incurring an accompanying disadvantage that balances things out (e.g. traditionally, diminutive races in war games have fewer wounds), then in order to avoid hard feelings, it's something that should be addressed before the game begins.

IMHO, the easiest way to address this is for both players to agree that all soldier and spell caster models are roughly the same height. A very practical way of handling this on the table top is, depending upon a model's height and the thickness of its base, to place a "vertically challenged" model on a small or standard size D6 whenever LOS needs to be drawn to or from a said model.
If the D6 diminishes the aesthetics of game play, one can either mount their Halflings on tall bases (e.g. model them crawling over a pile of rubble) or purchase transparent acrylic squares/blocks to place short models on when determining LOS.
TAP Plastics' online store sells twenty five 1" x 1" x .236" acrylic squares for $6.25.
