I don’t think it was so much a rumor as much as a wish for some riders who felt the R18 was too big.
But the market for small displacement cruisers was and is much more limited and often thought of as starter bikes. As the original R1200C showed us, it is even more limited if you think of breaking the v-twin paradigm.
But, the R18 is a lot of fun and from my perspective more character and smiles than the R1200C was in many ways due to the size of the engine. While I enjoyed my ride on the R1200C, I never had the sort of silly grin on my face that the big boxer engine creates. My GS is the same motor as in the RNineT and while it’s nice, the big boxer is something else entirely. I don’t expect BMW will try a small displacement cruiser again unless the R18 becomes a runaway success.
Shorter riders should be OK on the R18 as the seat height is on the floor and often reducing reach can be accomplished at no cost by simply rotating the bars. Pullback risers can further reduce the reach.