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Don't shrink the AirPods too much!
There is a limit to how small objects we interact with can be. If you go too small you will find them difficult to use and even worse they are easier to lose.
The concept above, more here, is an example of a design that is different, more portable and eye-catching, but it would be a nightmare in day to day use.
I remember the older Apple TV remote, the uniblock silver one, and how often we lost it. It must have been misplaced more than 20 times and often for many days at a time, to the point that I began to hate it with a passion.
The current AirPods case size is about the limit for me when it comes to finding it and even with clever 'Find My' features I would prefer to have the perfect balance between portability and practically rather than too small for the sake of it.