Hahah. We have a 11 pound poodle-terrier mix who's also fairly tall for his size. There is no possible way to have a half foot clearance unless the dog is like really really miniature. The max height for the carrier is 10.5 inches. I haven't had a problem. We use a soft-sided carrier and we have to demonstrate that he can stand up and turn around, that's all. He's fairly cozy, that's for sure, but he can still move.
I can understand your concern about the barking, though. Ours tend to get a bit fussy once everyone starts moving to get off the flight, but they're fairly good. We cover their crates with thin flannel blankets. Like yours, they tend to be better behaved when they are covered and can't see us. Plus, it gets fairly cold on the plane. One of our dogs HATES being in the car, but she doesn't mind flying. It must feel different.
Anyways, just something to consider! It's nice to take your dog along when you travel