ANU is likely the best compromise option for us at the moment, yeah. All my friends and family are in Sydney, so it's not too far.
Though even as a Sydney-sider, I don't consider Canberra to be a small town. Not after living in German university towns for the last 5 years with pops <150k.
Having said all that, Canberra is an example of how Australia has (once) planned out a charter city and had it succeed. However I am not sure we can do it again without the federal government being as deeply committed as it was in overseeing its own future seat.