A plunge pool gives you the best of both and allows you to maximise the space and your budget. Adding gas heating and spa jets and even a swim spa jet to a plunge pool would really complete this goal.

Breaking up the great solid block of colour a little bit helps to hide it. Next is the choice of what to plant. I'm leaning towards: ficus pumila, climbing fig, which can be pruned to hug the fence tightly, Himalyan blue bamboo, (but might sprout on other side of fence as well, so should have a 60cm deep root guard or be planted in pots) or waterhousia floribunda, weeping lilypilly, which can be pruned to a narrow, non-climbable hedge but 30cm might be about as narrow as possible. I'm just a bit scared the bamboo will move into the neighbours yard too...You also have to be careful to not plant anything with massive roots that could eventually crack your pool, and it has to be tough enough to cope with a bit of chlorine... Then, put in a dip line so you don't have to water such a narrow spot. Good luck, and let us know what you decide.

Your problem is the heat generated by the fence and the pool and path. Anything you plant will have to be super tough. All plants loose and replace their leaves. Evergreen drop some leaves all the time and deciduous once a year. Adding pebbles will only reflect more heat and is becoming a dated look along with the cordylines. I'm not sure of your climate but a bullet proof evergreen plant that will cover the fence and take sun, drought and frost is the nandina domestica. Upright growing but no pruning required. There are new varieties of this plant but this one is just the right height to cover the fence. If you get cold weather in winter you will also get autumn colour. Will sucker from the bottom to fill the gap but not a garden thug. Has berries but because of the upright habit should fall into the garden bed. Sometimes called sacred bamboo but not a bamboo.

I would definitely choose small backyard with the pool! Our backyard is rather small so when we moved in we decided to use the space as much as we could! We called the guys that install fiberglass pools, since we heard that these are great choice and more customizable than the others. We are enjoying in our backyard every day!