Is 12'x12' too small for Magnepan 1.7's?

i would say so

also the perfectly square room dimension is rather problematic

Move upstairs.

Too small. With the 1.7i you really need at least 4-5’ of space behind them to enable them to breathe, otherwise they will not image well and will sound congested.

I had 1.7i in a 12 x 15 room and they sounded great have since moved to 3.7i in the same room with great success. As long as you have about 30" behind you should be okay. You could also consider the LRS+ and a sub.

I had MMGs in a 10X10 room but the room was at it's limits with the speaker 4.5 feet into the room. I tried a pair of 1.6s and I could not get them to work in that room. Maggies like space, if you can use another room, do that.

I had 1.7i in a 12 x 15 room and they sounded great have since moved to 3.7i in the same room with great success.

this is quite different from my own experience

in my 19x23 dedicated listening room, acoustically well damped, i feel the 3.7i can still overload the room in the midbass... positioning is rather critical for the 3,7i’s for an even response, whereas the 1.7i really work well, with much more margin for error in my room

i find i need a solid 3 ft behind either speaker or else there will be reflection/cancellation issues

13' x 11' room here with .7's. Don't sleep on the .7's very musical, low distortion, and put out great bass in my room. Jim (tomic) has said he thinks the .7's are the most coherent maggie he's heard. 

I have a Magnepan LRS+ in a 12 x 11 x 9 (4 extra feet of closet space) and the system sounds great. I have no desire to ’improve’ these speakers in this room. I use it with a KEF KC62 subwoofer (even better).

I put the speaker 3-feet away from front wall.

My thanks to all who offered advice and suggestions regarding my plight. I think, even if I had optimized the 12'x12' room from a listening standpoint I still would have felt a little claustrophobic with the arrangement. 

I finally dragged the magnepans up the long flight of stairs and set things up in the larger room and the results are very encouraging. I'm a happy listener again!