A seattube extension isn't necessarily a bad idea. It's done a fair bit around the industry so it can't be all bad. I don't know how others deal with it around the seat cluster, or if they use a conventional seat post extending below this junction, but the ISPs out there obviously don't have a seat post as such. Don't tell this guy it can't or shouldn't be done. http://www.englishcycles.com/ Note that his stays are attached lower that top tube junction as well. Cool stuff!

That said- I do it too. I do it a little differently than the ISP guys. I use a conventional seat post with most of it's length removed (you only need insertion below the clamp.) The reasons I do it are...

One- I don't like the appearance of a conventional seat post sticking up above the clamp. Two- It saves weight. Three- there is always distortion in the tubes at the seat cluster, so by extending the seat tube there is no need to ream for seatpost fit, which I feel weakens that joint on an already thin seat tube.

The downside is that there is no height adjustment so you better get the fit right. One upside? No one asks to ride my bikes because they probably won't fit them unless thay are the same size as me.

I've also done it on two lugged frames but the appearance (improvement) aspect just doesn't fit lugs.

Just because I do it doesn't make it right. I don't do any fatigue testing except by actual seat of the pants mileage. So far so good, and in the case it isn't you'll get plenty of warning before the seat tube pokes you in the butt. I don't build for others so I needn't worry about the problem of either durability or liability. Like you, I am also short, so also light weight.

For some reason I can't insert a pic, but here's the link to the latest bike (only #10)

First is completed frame before paint. Before painting I thrashed this bike for roughly 800 miles.



Second is the same frame just painted. Looks sooo much better than the rust. Ride weight- 16# 3oz.