Small Room. Go for it or forget about it?

I have a small room for my second system--a much smaller room than yours--and it works very well. One reason for this is the disused closet which functions to help control bass.

So I would say don't give up. Your component list looks very good. Have fun with room treatments--get help from a consultant like Rives if needed--and you'll likely do very well.

Sometimes putting the system in a corner rather than on one of the walls will get great results in this situation.

Also, when you listen 'near-field' it does not matter nearly as much.
near field is close... very close.