Thanks to Algorithm1248 for this! I'll let them explain:
In VaM 1.X, the player height adjustment is not affected by the world scale, so a change in scale causes a perceived relative inverse change in the height offset. If the adjustment is substantial (e.g. when the player is sitting and the possessed person is standing), this can cause the player's viewpoint to be well above or below where intended.
My addition causes the height adjustment to be updated at the same time as the world scale, so the two remain in sync.
