That is really of little practical concern. Storage space is dirt cheap, and getting cheaper by the month.
Increasing the space required 7 fold is not even a dent out of a pretty inexpensive hard drive. The only things this would impact significantly would be laptops and some older macs.
The issue wouldn't be storage space; it would be CPU and RAM usage. You'd have seven times the amount of "tiles" in the game, and this would make calculating things a lot more challenging. Also, you could no longer assume that the game has a cubic grid for any purposes, making a lot of things (especially volumetrics) potentially more difficult.
Also: No, occlusion issues *can't* simply be solved by rotating the view. After all, what happens when you have, say, a 10x10 wall section with a single space in the middle dug out? You'd have to start getting into things like transparency in order to make it work. After all, we're talking about a game where you can be expected to look at every single tile sometimes.
And no, I'm not an "ASCII purist". Hell, I use a graphics pack because the concept of playing such a complicated game in pure, abstract text sort of frightened me (which I guess is my own fault), and I'm fully in support of DF having things like better color support (I don't see any reason why it needs a distinct 16-color pallette) and, at some point, better support for tilesets as well. I'm just trying to make the point that isometric graphics would be a much bigger headache to implement than anybody seems to give them credit for.