The limited Z height is less of an issue that one might think, given the overall small envelope of the machine. For a horizontal fourth axis parallel to the X axis, I would put about 60mm as the largest practical diameter of a workpiece, and length is likely to be limited to maybe 150mm, given that the axis would need to mount on the moving table.
Replacing the Y axis with a (horizontal) rotary axis, to make a cylindrical coordinate system with radial tool and keeping the system a 3-axis total, would allow the table to be removed, giving a maybe 10mm more diameter and a full 200mm length for a part. I don't know if there is enough room to meaningfully replace the table with a vertical axis rotary table, to make a cylindrical coordinate system with the tool axial, and maintain good rigidity, and I really don't know why one would, as the g-code would be a bear to generate, and maintaining appropriate feed rates would be difficult.
But I don't think I'll worry about it much more, as machines are available that have the native ability. On the other hand, maybe I'll build setup to replace the Y axis at some point just for giggles. I probably have sufficient material and parts stock to do it for no more than the cost of the stepper and some time.