So what is in the closet? Could some of the lower closet be utilized for the sub woofer? That would remove the near boundary sub woofer
reflective surface, both in audio, and video terms. Not only would this eliminate early reflections audio-wise, it also would eliminate a surface
near the screen that will be lit up, by light coming off the screen.
Another way to make a smaller room feel larger, is to go very dark in finishes. Pretty hard core but the dark finishes make walls and ceiling recede.
The dark nature of the room also helps push picture quality closer to what a projector is capable of. It also helps dial down the light coming off a
screen, and that lighting up the room.