#8 - March 31, 2008, 9:09 p.m.
There were changes made to the Tauren weapons, while sheathed, to address issues where weapons would clip through the ground or the player model itself. The item size is reduced while sheathed so that they aren't dragging through the ground, etc.
My own personal opinion is also so that the weapons in Lich King can be longer and/or more complex, but I wouldn't take that as an official reason.
There is an issue though where the main hand will appear smaller than the off-hand while sheathed, which I would guess probably isn't intended.
We're of course very aware that the visual representation of a player's character is extremely important, and we attempt to make changes to it as infrequently as possible.