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.

Go for it. Like anything else, you have to size the equipment to the room. Imagine how great some exquisite small monitors will sound in there with moderate power. Like oversized headphones if you do it right.

Room treatments could be significant for a small room depending on shape, so plan some $ in that direction too.