I just created a new IS and used the FIRST TWO FIELDS as the SOURCE of the headline. Since I made this selection, all the FIELD ROWS show as about 2" tall. The settings say .2", but the row clearly shows tall.
Notice the first row. I type over the ID and hit return, it corrects the row height! Then closing the schedule and re-opening sets all row heights back to BIG.
Then, going back to the HEADLINE SETTINGS... there is no longer an option for the FIRST TWO FIELDS, but it is still clearly using the first two fields as a headline.
I know you have tons more experience than I but thought since no one has responded yet, I'd throw this in.
I noticed in your screen shot that you only have the single first box of data row highlighted, or so it seems to me on my screen.
In my screen shot I have the whole row highlighted and then set height.
That sticks for me.
But maybe I don't understand what your problem is/was exactly.
Sorry if that's no help at all.