See MDL-39351 for screenshots and discussion.

It would be ideal if they were sized as close as possible to the size of the original textarea they were created from.

An alternative that might be easier is just to set a minimum height for the collapsed editor (about 70 pixels from Freds testing).

The current behaviour is that the "Full" editor is sized as close as possible to the textarea, and the collapsed text editor is sized to have the same content size as the full editor. So the original text area needs to be > 7 rows in order to get more than 1 row in the collapsed one.