Artzi, let me take a stab at this question.
I think the sheath size might be a matter of custom. The dress is the outer appearence and is very much tied in with the way the blade looks as an accessory to the dress of the wearer. The lenght of the sheath is probably proportioned more to the size of the man than the size of the blade. I have seen many keris sheaths that are obviously made for the blade yet much longer than the blade itself. A smaller sized sheath would look inappropriate in context to the man's dress.
BTW, this is a beautiful knife and i can't blame you for putting this on the no sale list.
Does it remind anyone else of a piha kaetta?