7X14" should be plenty clearance-wise to machine pistol barrels.
The problem with smaller machines tends to be horse power, mass, rigidity, etc. A smaller, lighter machine will be affected more by vibration and have more flex during cutting operations. This is where you're going to run into trouble with grooving, threading, heavy turning, and other operations that exert a lot of force.
Many of the smaller machines may not have the capability to single-point cut threads (or they are inconvenient to set up for it) and I can't speak towards the tailstock capability for reamers and such which will be important for barrel work.
I'd also make sure you can get a 4 jaw chuck or a headstock spider fixture if you're going to be doing barrel work.
EDIT: Just thought of another thing. I don't know how many of the smaller machines have power feed, which I really consider essential on a lathe (at least in Z travel)