Well,
Designing a smaller species to go into space would have definate advantages, most specifically size. If you made space hobbits, then designed a ship for them to go into space with it could be smaller and more efficent. Imagine how much smaller you could make a bridge if designed for 3' persons. To see a real world example of this just look at airplanes. It's physicaly uncomfortable for me to shoehorn my 6'2" frame into a Lear Jet cockpit. and after I get into the seat I have to hunch to see under the glare shield. To make that comfortable for me would require a higher panel, large frontal area, more drag.
I could see sending the hobbits out on generation ships to colonize. Then when they arrive Using the Giants to tame and build a world.