Minimal example:

m := Morph new. m changeTableLayout. m vResizing: #shrinkWrap. m openInHand. m addMorph: (Morph new color: Color red; extent: 200 px asPoint). m removeAllMorphs. self assert: m height = 0.

Actually, I even wonder why the freshly initialized morph does not have the height 0 ... Is this a bug or expected behavior?

This behavior is probably caused by the "0) Quick return." check in Morph>>#doLayoutIn:.