Hi Teddy
Assuming full flap had been selected a bit early then surely you only gain by going back to take off flap as you will be losing the excess drag without compromising stall speed. Your planning on when to select full flap should be such that when you select it it stays down until after landing or a go around is initiated I agree but not every approach is the same. My point on raising flap was not to go from full to zero, just up a stage simultaneously adding a bit of power to cover the sink.
For what it is worth my scenario, not fully explained, was that in which you have accidentally extended more flap than intended. On realising pretty much immediately then little height is lost in getting rid of that extra flap.
I am not suggesting that every landing should be from a glide approach, especially having done a bit of STOL stuff over the years but dragging the aircraft in for longer than necessary in a configuration such that the runway would not be made in the event of an engine failure does not have me feeling comfortable.
As for your example on the PA38, the height should be OK, as I find that I need to tighten the turn I would either add power (as you do for a steep turn but this would be the worst option given altitude) or accept overshooting the centre line and then come back onto it from the other side. It might look a bit scrappy but it would be safe. As you mentioned on an earlier post if in doubt go around and that can be from any point within the circuit, it does not have to be from short final.