I'm going to need some help.

[Jonathan]

Do you think the "significant deflection" would be a couple of millimetres or worse than that?

Possibly, it's hard to calculate an actual figure as it depends on so many factors. To an extent you can minimise the deflection to an acceptable level by reducing the depth of cut and thus the cutting force, but there's clearly a limit.

I wonder if I could make do with one ballscrew to start with and replace it with two later on? Moneys pretty tight at the moment.

It's not uncommon to do that, although bear in mind the piece of aluminium on the bottom of the gantry is wasted when you do change.

As for the frame design, does having the rails directly under the gantry improve the rigidity, compared to other designs I have seen with tall gantry sides?

Your first design with the very short gantry sides is far better than this concept since the gantry sides are effectively replaced by the main frame, which is significantly stronger and can be made so since it is stationary. If you want to save money consider using steel box section for the main frame instead of aluminium extrusion.