las, my system has a area in the sump about the same size as what you describe. In that area, I have both a shallow sandbed and macroalgae. While the flow through rate is certainly higher than desired for a fuge, the macroalgae is certainly able to pull enough nutrients from the water to show significant growth. I didn't put a DSB in this area, because I have a DSB in the display, but I see no reason that combining the two wouldn't give you some benefit. Certainly its not an excuse to not keep up with your water changes, but in my mind some exportation of nitrates through a DSB and macroalgae throughout the week is better than none. The larger remote DSB is certainly a better option (although a fairly expensive one if you are throwing all that sand out once a year or so), but if you don't have room to do it, you don't.
Well, I used to have a 5" oolitic dsb in my display. I decided to pull it out because the top layer was clumping up for some reason. Also, I was worrying about detritus accumulation. Now, i have no sand in my display at all. My corals grew faster before. I really think that the dissolutuion of sugar fine oolitic sand really helps corals grow. I really cant decide which way to go here. I def do not have room for a DSB bucket. If i did, i would for sure be doing what sasquatch said. I guess Im left to decide between a macroalgae fuge with just Chaeto, a 5" DSB/mud mix with chaeto or a 1" mud bed with chaeto. I would change out 1/3 to 1/2 of this sand bed every year. I gotta make a decision!