You're right, the space requirements are too high!
The manual says "the *ideal* range is 5 to 9 feet away from the camera". 9 feet! That's crazy....oh wait, that's from the Playstation Move manual.
The Kinect manual recommends 6 feet for 1 player and 8 feet for 2 players. So 2 meters for a single player, exactly what you were hoping! Another crisis avoided.