You are correct, this is a new change because of:
To disable this, in Terminal.app set this plist tweak:
defaults write com.binaryage.totalfinder TotalFinderDontEnforceMinSize -bool yes
And then restart Finder via CMD+OPT+ESC and launch TotalFinder.app again.
To remove this tweak
defaults delete com.binaryage.totalfinder TotalFinderDontEnforceMinSize
If you set size too small it could break visual layout of Finder/TotalFinder views (a visual glitch) as described in the linked thread.