Two ponts.
First the CAA policy is for aircraft not to extend downwind because the one in front has. If the one in front has extended downwind beyond the normal point for turning base and remaining within the ATZ then as far as the CAA are concerned they have left the circuit.
All aircraft should fly the standard circuit and if necessary go arround should an aircraft that has "left the circuit" rejoin on a striaght in and become a conflict.
Secondly, I get a lot of "my aircraft is fast so I have to fly bigger circuits". Not true in most SEPs and many Twin pistons unless you insist on flying the circuit at cruise speed. The arrow is very comfortable clean at 90mph or 80Kt (whichever you use on your ASI) which is only 2 knots faster than most C150s downwind.
As for tight circuits - the usual issue is to be in a position to glide back onto the aerodrome not necessarily the runway during the early to late downwind leg. By definition if not doing a glide approach, the aerodrome is mostly beyond gliding distance late downwind, base and final. Similarly don't turn back in an EFATO puts the field out of possible options until one is almost into the crosswind to downwind turn.
Having a reference point on the wing or the strut where one puts the centerline provides automatic adjustment of distance from the runway regardless of height when downwind.
Keeping everything within 2nm is not bad for the average SEP or light twin. Doing less is type and experience dependent and one must not get so engrosed in keeping the procedure so tight that the checks are rushed and lookout less than required.
Far better to have turn from crosswind to downwind based on circuit position (ground location) than some height that will happen in random positions depending on wind, performance etc etc This helps contain noise and keep the neighbours happy. Same for base leg when doing powered approach.
I would not be so hard on using a figure of must be 500ft or above turning final as this is totally dependent on distance to run, wind and type of approach.
Regards,
DFC