Sorry greg but that's not my experience with small speakers.
I don't know what you consider a small room but my old room was 19 x13 with the speakers facing the short way. I had the wonderful small Alon speakers in ten or so years ago (whose name escapes me at the moment) and had none of the problems you described. The soundstage and imaging were spectacular and every bit the W/P that I had in house too. In fact, small speakers are usually noted for their imaging and soundstaging--lacking more in low end extension.
When we're talking about imaging and let's restrict it to jazz/classical, the miking technique as you point out, is a major contributor to imaging/soundstaging and centerfill as many companies such as Decca have shown. For instance, M-S is going to sacrifice center fill.
When it comes to jazz, Contemporary was the first jazz label to lock into the idea of the "phantom" middle channel image. Till then, you hear on Blue Note, Riverside, Prestige, etc., with their 2 channel recordings, that "hard left, hard right" or "dual mono" effect. It was the Art Pepper Plus 11 recording that served as the breakthrough in imaging for jazz labels. Contemporary had to bring in extra mixers to accomodate all the instruments and in the end, they had one instrument left over. The question was then, do we put that instrument in the left or right channel? Someone there suggested, "why don't mix mix 1/2 into the right and 1/2 into the left" and voila, they had a center channel image. (something that the classical labels were quick to understand but jazz much slower and later for some reason.)
I also think that's why on many jazz labels the cymbals and drums tend to be sometimes splashed against the back of the stage, eg. they mixed the mikes from the different cymbals, drums, etc into the different channels.
