Not a good idea for the main arenas, even though I would personally enjoy it. For the majority of AH players, immersion is being able to identify a Spitfire from 18,000 feet away even though they could not do it in real life. It also keeps things from getting too hairy in the massive horde furballs. You won't find more than a handful of people who want icon ranges shorter than 3k (9000 feet).
At 5,280 feet (1.76 AH icon range) is it difficult but not impossible to positively identify a 45 foot long aircraft. If you have seen it close up at any time, it's easier to identify due to memory, unless 2 different aircraft with similar profiles and coloration are together, then you could get them mixed up.