I like this idea. The all or nothing is a real problem. When they tweak game rules, sometimes we all have a great deal of scrambling to do to become the most efficient again. (Though, obviously some don't play this way). If you need just a few more population and all your houses are maxed out, you might just want to drop a building down a couple of levels.
Also, as Phil pointed out, often you need to deconstruct in order to get more room, but you might only need an extra square or two and possibly just going down some levels will make the buildings as small as you need them to be.
(However, I have a feeling the all or nothing approach is a feature stressing the commitment they want you to make in order to make certain moves in this game.)