We had a different experience with circling the Ring Road in an RV — we loved it! Maybe it was because it was just the two of us?
Yeah, the cramped quarters were the main problem. If it had just been two of us, I think it wouldn’t have been a big deal (and we could have rented a smaller, more manageable RV or camper).
The other problem was that the RV trapped us in Skaftafell for two days when the winds got dangerous. Having seen the videos of RVs blown off the road and destroyed, I wasn’t going to risk it. If we’d been in a smaller vehicle the high winds wouldn’t have been as much of an issue.
If we go back (and I hope we do!) I think what I’d like to do is pick a couple of bed & breakfasts and spend several days at each, and rent a small 4x4 for day trips. That would also allow us to more easily explore the interior of the island, or the Westfjords.