Having done a few TERPS circles the last thing I want in difficult weather in a circle is the added pressure of having to stay within a very tight area.
Agree. To fly a 737 and keep inside 1.7 nm from the runway while allowing for drift and at the minimum vis for circling, can be bloody dangerous. The critical obstacle that defines the published MDA for circling may not be displayed on the instrument approach chart that led to the circling manoeuvre in the first place. It could even be just outside the approach landing splay and invisible at night.
Received wisdom is you don't commence descent below the circling MDA until lined up on final hopefully with a VASIS or PAPI available. But with circling MDA's varying greatly for example from 1500 ft agl to as low as 700 agl, then in order to keep within the protected area for a 737 category, the pilot may be forced to commence descent below the MDA well before he is lined up.
The danger of that is obvious unless the pilot is familiar with the local terrain. The ICAO published protected area around an airport allows a much safer operation; even though occasionally it may result in a higher circling MDA than closer in. A small price to pay for a significant safety factor increase.