I think you need to see the problem in terms of "bigger, more protected bikes" rather than "tiny cars"

In fact, you already have no right to drive whatever kind of vehicle you want on public roads. There's no part of daily life that's more regulated. And there's no interesting argument about freedom to be had here. We build the roads as a society, so we have every reason to make rules about what kinds of vehicles are allowed on those roads.

Today, we allow an absurd range of plainly unsafe vehicles on our roads, but I think the status quo is untenable. As technology makes the cars safer it's going to be harder and harder to justify allowing giant vehicles piloted entirely at the discretion of flawed humans. In a world where the car knows you're asking it to speed up into a crosswalk full of children and can prevent you from doing it, it's basically absurd to insist that the car should instead respond only to the driver's whims. What I'm trying to say is that size is just one aspect of this. We need to entirely rethink what we're allowing on public roads.

It has already happened. I drive an ebike in Paris almost every day. It's even smaller than a "half vehicle" and has absolutely zero protection, save for the helmet. I wouldn't trade an ebike for a "thin car" though, because an ebike can go anywhere. It's an incredible level of freedom.

Some people are already driving smaller cars than I imagined we'd be comfortable with, but I can see ways to ease more people into the idea of trading their safety for a smaller car. High gas prices help, but things like reducing lane sizes just enough to make driving smaller cars feel more comfortable, but not enough to be too dangerous for larger vehicles, increasing the amount of small car only parking spaces, and lots of advertising money would probably convince a lot of people small cars are what they want. If car manufactures start making more and more tiny cars (especially inexpensive cars) many people aren't going to have much of a choice. I'm pretty sure most of the American public could be sold on it eventually if someone were willing to spend the money.

There's no need to imagine what that that would be like, because the situation has existed for years already: what you describe is just everyday reality for motorcyclists.