Then the pilot asks if he can do an orbit instead of a full go-around. ATC agree to this.
Whilst there is justification in your comment about the ability of a current pilot to do so, I cant imagine why you would.
In reality most light aircraft circuit traffic will turn final at around 800 feet or less and hopefully will have been flying close circuits. Half way down final they will be fully configured for the landing, and in the case of a retractable the gear will probably be down some what sooner.
Even if ATC gave the instruction at the top of turning final, by the time you had requested an orbit and received their consent I cant imagine any good reason for taking up an orbit form the landing configuration at 500 feet.