I have a mandarin in a 29g Biocube. I have about 35-40lbs of live rock and he's healthy and fat... A "pod pile" will help alot, just stack a bunch of rocks in the corner, where other things in your tank can't get to, and the pods will continually reproduce if you drop some sinking pellets back there.
I'm not sure if any of this was said before, didn't have time to read the whole thread, just answering your initial question, that it is possible in a nano, i've seen it done in a 10g... clearly the more rock the better, but it can be done.