BioMax
+1y
There are several different ways to address suspension that has limits to it's confines. If you do a little bit of homework on 60's GM vehicles, you will find that they have some fairly unique, but simple to mimic suspension solutions. The '60 Chevy uses a 3-link with a pannard bar, the upper bar is called a banana bar because it curves over the rearend to the tab that is mounted behind the rearend-housing. Or the '61 Cadillacs use a 3-link with an A-arm styled upper wishbone that actually uses a ball-joint that mounts behind the third-member.
When designing a system with a uncomfortably short upper bar, set up the upper bar so that it is parallel to the ground at half travel and point the lower bar up towards the front to get a fair amount of instant center and I think that you will find that you end up with more travel then expected.
As far as a watts-link... do what you want. It won't really make any difference with a long or short upper bar.