I could be wrong - but I'm 5'1, use 165 mm crank arms, get knee pain with 170mm crank arms, and I usually have my saddle all the way back on the seat.

My experience with small bike frames is they usually adjust the seat angle to 74 or more degrees which makes it so that if your seat isn't all the way back, it feels like you're really sitting right over the cranks... and while short people are shorter, their femurs are usually not that short that it's comfortable to sit right over their cranks. I usually have my seat all the way back to compensate for the seat angle and I just use a shorter higher stem to bring the handlebars closer to me.

I just bought a frame with a 73.5 seat angle and I find the positioning of the seat to the cranks much more comfortable and natural.