I certainly agree that choices in geometry affect handling and thus the geometry considerations when considering 700c vs. 650b should also be looked at from a handling perspective.

However, I've gotten the impression from this thread that if you want a 700c wheel on a small bike then you are going to have to live with either a) a horribly sluggish slow steering bike with the wheel way out in front of you b) a horribly twitchy bike or c) some weird compromise in your seat vs. pedals position.

As a 5' tall rider with two 700c road bikes (one an XS Giant and one a 47cm Wilier) I disagree. Yes, the geometry on both bikes is slightly different than the medium versions. However both of them have different handling characteristics that fall well within normal and are in fact adjusted to the purpose of the bike, just like the bigger frame sizes. The Giant is more stable, but it's also an entry level, relaxed geo bike. The Wilier is a race machine and acts every bit of the part, including the quick handling (but not twitchy). I rode quite a few bikes before I bought the Wilier, all of them 700c. I could feel different handling characteristics in most. None of them had horrible handling IMO (I didn't like the Trek for other reasons).

Anyway my point is that yes there are compromises for both wheel sizes. Handling is not necessarily one, especially not to the extremes in some of the other posts. A good builder is able to get the bike to handle the way they (you) want it to, at least in my size (46, 47cm) with either wheel size.

Me, I ride 700c and have no desire to change that.