When I read posts like the above, I always think of Kozo Hiraoka who had a workshop 8 feet by 8 feet in the corner of his living room, and he produced world-class results, both in terms of modelling, but also in researching, design, and writing.
Sorting through the "requirements" from the "wishes" is always difficult, because "wishes" become "requirements". Sailors call this "two-foot-itis" – having a boat 2 feet longer would solve all of the problems of their world, until they realize it's too big to manage!
For me, if I had a choice, I'd send away my large lathe, and keep an Emco Compact-8, with change wheels, and it's vertical head bolted to the back of the bed. I know, not "ideal" but suitable.
Just my two cents – Another JohnS.