Hi, Dana!
Time, experience, and many partners have taught me (personally) that this arm rubbing exercise is just a skeleton of all different kinds of training. As such, there are many interesting ways to practice it, and many benefits from it.
To start with, I'm not so sure that most folks (even I) understand what this exercise is for, and all that can be gotten from it. Yes, we can regurgitate what our elders taught us. But truth be told, most of our elders took the Nike approach (just do it) to this and many other things we do. There wasn't a lot of discussion other than perhaps nagging students to keep good stances and keep their shoulders down.
I don't see the height differential necessarily as a disadvantage, nor do I think we should automatically alter the exercise when encountering it. We won't only face partners our size, will we? That being the case, learning to apply the principles and receive the benefits has to happen in the context of how we intend to apply our art. If you expect to be attacked by small women, then get the big boy to squat for you. If you think only people bigger than you will be attacking you, well...

I personally seek out taller partners to work with. Why? Being able to thrust high while pulling the AC joint down is part of the "pan gai noon" thing we work on in Sanchin in many ways. It's the yin and the yang symbol where white goes into black but you have no gray. It's being able to walk and chew gum at the same time. I can't tell you how many students I've worked with who have all kinds of problems doing this. Ask them to pull the shoulder down and the strike goes to the belly. Ask them to strike higher and the shoulder comes up. Only when I get them working against a taller partner and nag/poke them into proper arm rubbing while pulling the shoulder down do they finally get the walk-and-chew-gum thing in that part of their Sanchin. You, Dana, just have a built in advantage in this regard. No wonder your karate is so good!
The "tired arm" syndrome is a function of many things. Some time back, George had someone film he and I doing arm rubbing. It's on this website somewhere. I wasn't wise to some of what George was doing, and it was a bit of a set up - to the benefit of his enlightenment. If you find the clip and watch it, you'll see he outlasts me. How he does it is the interesting part. Basically when George does these demos, he is not extending or flexing his arm at all. None. Zero. All the movement is with his core alone. He's holding the arm in the Sanchin (maximum strength) angles, and just shifting his center back and forth like a tai chi practitioner. The only thing he does with his arm is alternating between supination and pronation. Is it a "trick"? No. It's just waking us up to where we should be deriving most of our power. But it takes us a while to get there. Once you get it though, you're moving just like any "natural" athlete.
There are a number of other issues and benefits involved with doing arm rubbing. One is the conditioning of the skin over top of the ulna and radius. The muscular areas of the forearm respond well to pounding. I find the skin-over-bone areas respond much better to rubbing. As such, I use rolling pins now to develop my boney shins. And if my students are rubbing any parts of their arms other than the boney ulna and radius, I correct them. In my dojo, arm rubbing is not a muscular massage; it is for the boney parts. Joe Lewis, FWIW, got many of his knockouts in full contact karate by using his radial bone as the contact surface in a ridgehand-like strike to the head. It's a brutal weapon. Shin bones work really well against thigh muscles.
There's also a lot of learning in the sense of getting all the parts to work together correctly. Unlocking the Sanchin posture and moving the body with the arm movement helps here. This helps us tap into the principles of SSM (sequential summation of motion, and simultaneous summation of motion).
I also find the rubbing works really well - on the pulling part - to help me get my inflexible students to work on their elbow-in positions. When pulling back, I often have my flexibility challenged students try to pull their elbow into their center line. When they can do that, there are any number of things I can teach them to do with their empty-hand and weapon martial arts. Doing that as a whole-body motion against a resistance is very beneficial.
There's also the issue of what rubbing teaches us about the geometry of inside fighting. At least from the outside, we learn how to feel and respond to an opponent we are in contact with. We learn to play "chicken" with the line of force, thus setting us up to be where our attacker wishes we weren't. We learn how to touch first with our forearms (rather than our vulnerable hands) to reduce the probability of injury and increase the likelihood of a productive first contact.
Turning arm rubbing strictly into a strength pissing contest IMO misses out on a lot of these things. As Robb mentioned above, we're engaged in a cooperative exercise. If all we're trying to do is get strong, I have any number of weight exercises I can teach people that will get them there MUCH faster. But that really isn't the primary goal IMO. The goals are numerous, and the benefits IMO are supposed to compliment and not replace our strength training goals.
- Bill