I've made a number of 650c frames (so have students in my frame building class) including one for my 5'3" daughter. Some women like to sit a bit more upright to take the pressure off of their crotch and that means their saddle position goes back a bit requiring a shallower seat angle. The combination of a shorter top tube length with a shallower seat angle means massive toe overlap with 700c wheels. Smaller wheels just make so much sense in this situation. A production bike solution is to have a very steep seat angle (76º or so) with a very shallow head angle. That keeps the company from getting sued but but doesn't work for the position shorter people require.

It is easy enough to design a frame with 650c wheels using short reach brakes (39/49) that will also fit MTB rims (559) with medium reach brakes (47/57). It requires swapping out brakes after changing wheel sizes but nothing could be simpler than that. On my daughter's bike that meant she could use her 650c wheels for performance riding and if she got more adventurous could switch wheels and brakes to give her wider tires for traveling where road conditions aren't as smooth.