I manage like that as well. I have 104 distinct knights (2* - 6*) and I'm leveling all of them. Additionally, I keep the time-limited reissued event dupes in case they are needed for blooming. Those might not be needed, but I'm not sure how blooming actually works and I only heard that such dupes are good to have. I'll need to look into it later.
That leaves some space for other stuff, like Dragons and Manyu, though I agree it is a little cramped. Then again, if you're a F2P player, every FG counts so I use them for expansions basically only if I need space for a new knight.
I haven't expanded the equipment inventory at all but I keep a set of 20 leveled pieces of each type and I've never really needed more.