I'd say it should:
1) fit in the overhead without the need for any special permissions,
2) it should travel in a hard case; some folks really jam the bags in,
3) it should come as close as possible to being a 'real' guitar, big enough to have reasonably good bass tone,
4) it should require no special tools to set up.
The 'standard' size exists for a reason: that's the size that balances power and bass response in a way that suits the repertoire well. A smaller body, which would be required to fit in the overhead in a hard case, tennds to produce a powerful and 'carrying' tone, but can lack desirable 'fullness' in the bass. A small travel guitar might not be capable of covering some of the standard repertoire as well as a standard sized box, but when well made it might be more capable than expected in the hands of a good player.