Balrog size

[Kuruharan]

Curse my dumb ISP's server! Down most of the day, couldn't post. Oh well, I'm back!

Why didn't Melkor just take a 300-foot-tall body and annihilate the Elves with one swift kick? I'd rationalize this point by saying that at the time when he took his form, he was not as interested in nihilistic destruction as he was craving to dominate and rule all. By the time he was absolutely mad, he was too diminished and bound to his hroa to get huge and stomp about.

It depends on when you think that Morgoth became more interested in nihilistic destruction rather than domination. When he visited Ungoliant, "he put on the form that he had worn as the tyrant of Utumno: a dark Lord, tall and terrible. In that form he remained ever after." So after the visit to Ungoliant he never changed forms again. Yet, destroying the Two Trees seems rather nihilistic, simply ruining things for the sake of ruining them. And he was in the same form then that he was in ever after.
It was obviously after the encounter where he is rescued by the balrogs that he lost his power to shape shift. It seems that on such a mission of destruction, where he was throughly protected by the Unlight, it would have been advantageous to him to assume as powerful a form as possible. I personally choose to think that he did.

If an Elf's fea had the 'power' to control a 6-foot body, a being like Melkor would have virtually limitless options.

Not exactly, by that time he had lost his ability to change his forms.
Although, on the other hand, it does not say specifically when he lost that power, just a vague line about how he "soon" lost that power forever, soooo, maybe he could adjust his height at will?
Oh well, I've rambled on long enough. I'll be quiet and let somebody else construct a case if they like.