Is there are practical lower limit to gene length in E. coli?
In terms of naturally-occurring "genes" I think that the record is probably held by the attenuator peptides.

In bacteria, the regulatory mechanism known as transcription attenuation involves the ribosomal biosynthesis of very short peptides. In the trp operon, where the phenomenon was first described by Yanofsky's group, the peptide, MKAIFVLKGWWRTS, consists of just 14 amino acids. Other examples, described subsequently, are of comparable size.

Now that I have written this answer, I have reread your question and I see that you are really interested in transcripts. In the case of the attenuators, the peptides are encoded by the 5' end of a much larger transcript, so they probably don't count for you.