No idea on the car seat issue but I honestly think that around 5 feet is a sensible cutoff point for back seat passangers. If the driver is reasonably tall then there is next to no leg room behind anyway!
Kids are fine upto the age of 1 year. Then you have to move ther front seats forward to get their little legs in. If you tall or drive with seat right back, the kids are screwed. So tell the kids its time to set off own their own!