In looking at the pics again (bearing in mind the fit issues you've just raised) I am thinking the widest part of the coat is where the side-seam pockets are placed? These are going to be lower than hip height for everyone (since they are meant to be able to readily access with hands), so I don't think it looks odd or like the coat is 5" too long on you. The overall length looks really luxurious and fab to me, similar to the Max Mara teddy coat (see pic).
If you lay the coat flat on its back, what does its shape look like? Normally cocoon coats are sort of egg-shaped, so the widest part is an incremental fullness through a large part of the body, rather than a jutting out at the hips (or below the hips, as yours is fitting you), if that makes any sense at all :). So my hunch is that the primary factor in what you're seeing is related to the side-seam pockets, not a bulging out below your hip because of the cocoon shape hitting you too low because of your height.
However...if you are genuinely not happy with the fit and you keep it, if you are anything like me the perceived fit issue will gnaw at you and lessen your enjoyment of the coat.
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