If you are going to mention it at all, them "short" is fine. It's simply the opposite of "tall".

Wenn du höflicher sein willst, verwende doch das beliebte „vertically challenged“!

You're joking, right?

Correction to my #1: them > then.

Es war als Scherz gemeint. Die Bewertung gemäß #4 war mir nicht bekannt. Es tut mir Leid.

Im Deutschen wird man eine Person nicht als 'kurz' bezeichnen, oder?

Um die Ecke kam ein kurzer Mann mit Schirm? "Ein kleiner Mann" oder "eher kleiner Mann" oder "ein nicht sehr großer Mann" ... generell dürfte der Hinweis auf die geringe Körpergröße bei Männern eher als respektlos empfunden werden. Bei Frauen ist das wohl kein größeres Problem.

"short" is not unfriendly or rude per se. That said, I'm not sure you would call a person "short" to his/her face, which is weird to me, because no one has ever hesitated to call me "tall" to my face - which I am, and since about the age of 13.

Maybe it's not a good thing to be short? .... in terms of society. I vaguely remember there were studies and stuff at one point about how very successful people, well, men (in business in particular), were often tall. Societal prejudice?

If I were addressing someone directly, I would likely use (very) petite for a woman, or "you're not that tall" for a man. (euphemisms much? lol)

As far as "vertically challenged" goes - definitely not freak-show level, but agree that it was maybe a couple of decades ago - it was always meant tongue-in-cheek, likely in response to the "this challenged" and "that challenged" considered politically correct at that time. I would only consider it humorous, never insulting. That said, you would only say it directly to a very close friend who totally "gets" you. :)

Als Randy Newman 1977 sein "Short people" veröffentlichte, gab es einen Aufstand kleinwüchsiger Menschen. Die übersahen dabei, dass der Text nicht Newmans Ansichten, sondern diejenigen von Ewiggestrigen, Rednecks u.ä. wiedergab, die er an den Pranger stellen wollte.

https://youtu.be/8bfyS-S-IJs