Mikka Kiprusoff was only 1 inch taller, had some truly stellar seasons, including winning a Vezina. This is just off the top of my head and what came immediately to mind -- I'm sure there's a couple more recent examples, though we're not talking ancient history here with Kipper.
I'm fine with the pick. You never know with goalies, though they seem to be more of a swing and miss, so it's good to have a bunch of good prospects at the position and hope one can turn into something.
I think Holland wants to put some prospects in the system, whatever position they may be, that he likes and is confident in. I'm fine with that, and pretty happy with the draft overall.