It is hearsay, but when multiple respected wrestling journalists (including the godfather of modern wrestling journalism, Dave Meltzer; not sure that Mark Madden falls into this category but regardless) say the same thing, you have to assume it to be accurate. In Meltzer's case, he explains their perspective a different way.

On one of the latest Wrestling Observer radio shows with him and Bryan Alvarez, Dave went into how Vince is about 6'2", Hunter is about 6'3", and when they physically meet with 5'10" Daniel Bryan their perspective is that of a smaller guy. Vince still thinks physical presence is a large factor, and while it certainly helps, you work with what you have. The fans have clearly selected Daniel Bryan (and shown that it isn't just a "phase" or temporary backlash to a specific aspect of the show), so at a minimum he deserves a run as the top guy.

Also, yes, in an ideal world, your top guy is good-looking, muscular, a great talker, has good media savvy, and is 6'3" minimum. Having said that, you work with what you have, and Bryan is what they have. Also, even though I'm in no position to do so (certainly having no experience with the industry at that level), as an outside observer, I would argue that while physical presence is nice to have, the reality is that a majority of your viewers see your product via television. This is reinforced in the WWE shifting the 80s/90s focus on house show attendance to generate revenue to the modern focus on television, with house shows as an afterthought and training ground for performers. On television, except in extreme scenarios, in my observation, a performer's height is not nearly as important. There have been a number of hugely talented performers who have drawn boatloads of cash in the modern era since WWE was forced to hire normal and smaller-sized men in response to WCW doing the same. Examples include Benoit, Rey Mysterio, Davey Boy Smith, and Eddie Guerrero. None of these men were over 6' and all drew boatloads of cash. Granted, most still employed the use of supplements to acquire excessive muscle, but regardless.