If the artists' wishes are the main concern, it will be a matter of taste how funky and casual to get. Blues might get funkier than folky stuff- for instance singing old Celtic songs with passing cars picking up on the back porch might not cut it, but could provide all kindsa vibe for the blues.
Quieter the music is, less of a problem, but I can ring the hell out of a room many times as big with my voice. You got blues shoutin' in there, reflections'll be coming at you from all over and loud ones too.
One thing for sure- it's always real wierd to track and playback/mix both in the same too-small untreated room. You can't tell what room sound is on the tape or what isn't.
Stay tuned for more useful info- more useful than this!
I'm thinking about Robert Johnson in that hotel room with Lomax- That had to be a ribbon right? Who knows? But that figure-8 with a serious baffle behind it could be one way to get a happening old-time small room vibe- the big old null on the figure 8 will minimize the floor, ceiling, and a couple walls if you have it pointed horizontal at the man and his guitar. If he lives that long. Never did make it to Carnegie Hall.