Mad Jock & Wiggy,
Don't dispute that the employer imposed requirements exist, but that should not be at the paying customers cost. If they want to impose these requirements fine, but set aside enough space elsewhere on the aircraft for such purposes.
I can't see why the bins can't be made a little taller, allowing bags to be placed wheels in, on their sides.
The LCC logic seems a little broken to me, they try and discourage bag check so they can reduce costs, but they still have to incur these costs even if nobody actually checks a bag. If they charged a reasonable fee they would improve our, and their, travel experience significantly.