Kit, great to have a new project to do.
Are you changing the toilet and sink?
Will your toilet be the water-sense flushing with 1.2 gal?
Will it be up high 17 inches?

The American Standard Cadet III that I got is the one piece (tank and bowl all in one), so it is easier to keep clean. It is also not taking up much space front-to-back in our small little bathroom, which was made out of two closets just like yours.

I had an adjustable height pole for the shower wand, on the hose, but there was another main shower head up high in the shower. and it was an 8" adjustable armed rainhead. I LOVE both of them. I can also give the dogs a shower in there, using the wand.

Inside the shower stall, I had a waterproof glass covered screw on light, such as the ones we had on the boats I worked on. There is a rubber o-ring where the globe screws onto the base plate of the fixture. Of course it is way up high out of the way, and quite handy to see what you are doing. It is switched with the vent fan in the bath. All the electrical is of course GFCI wiring.

If you are interested, I can show you the album from my tiny bathroom. We have a pocket door too. No room for one to swing with this small space. Every inch counts.
Good luck.

kitykat, I've wondered how old people manage tubs too. My mil hates showers and only wants to use a tub. I just want to walk into a shower.

I think a shower in the master bath is worth sacrificing closet space too and can't wait to see your plans.