The fact that someone two inches taller than you can sit up and you have problems is explainable - we are all made differently and it could be you have a longer torso and shorter legs than the taller person. Also, comfort is in the eye of the beholder - you may feel cramped even though technically you have a bit of room. Dont let anyone tell you you are wrong - its you that feels uncomfortable not anyone else.
You just made a mistake buying the tent, thats all.
The other solutions are well intentioned but I know how you feel - if it doesnt feel right I wouldn't want to mess about inflating things outside the tent etc.. and this is coming from someone who (personally) puts little value on being able to sit up in a tent in the first place!
Ah, thanks Jim, this was what I was thinking of - I had a vague recollection of something from a DIY shop that did the trick. I will give it a go as soon as I move the pets to their summer pastures from the garage!!
I will get nitwax for the outer as well, and will post the results in a few months.
I still think the Peapod is a great tent. The only downside is the need for some very good pegs for the front and back elastic pegging points. I bought some 'twizel' pegs years ago - they are effectively screws and are very secure. Much better than those huge yellow pegs!