My kids did rear facing until they were about 5, and we have a car that, while not tiny, is relatively small (crossover hatchback). Yes, their legs were a little cramped, but the significant safety differences (in case of an accident) made it pretty compelling.

The rear-facing laws in California define the _minimums_ (weight, age, and I think also height?) for when you're _allowed_ to let your child face forward. Given the difference in fatality rates between the two, I was OK with going past the minimum time.