Why is 6'7" too big to be a guard? Jordan played SG at 6'6". Magic played PG at 6'9".
If he has the quickness and the ability to slash inside and shoot from the outside (no idea on any of those), then let him play guard.
Of course, I'm not sure how much "positions" really matter for Barnes other than point guard (i.e. the person designated to bring the ball up the court). He has had teams with 3 players 6'3" and under (sometimes well under) on the court most of the time, and I considered all of them guards.