IIRC, the reason the handle is too short is because of Loki. When the hammer was being forged, Loki tried three times to screw it up. The final time, during the forging of the handle, Loki turned himself into a fly, and got in the eye of the person working the bellows. Because of this, they didn't have enough material to make the handle as big as they wanted it to be. But that's only IIRC.