Maybe one of the locals could shed some light on whether there are any possible alternative landing venues at Bankstown in this situation?
None really.
For the most part I don't think its fair to say that everyone is being taught to fly ridiculous circuits. The regs state fairly clearly 1/2 - 3/4 of a mile, most instructors I know try to keep somewhere in that vicinity. To have an engine failure and not be able to comfortably make it back to the field, even in a stiff northerly is completely unacceptable.
There isnt a school in YSBK that I know of that actively asks its instructors to fly large circuits to extort more money out of students. Usually when someone is flying an enormous circuit, its a gIII instructor who is at their limit monitoring the student and the aircraft and has lost S.A. Something that happens fairly regularly i'm afraid. That or its a northerly blowing.