hey Randy,
we run quite a few wood machines- producing all grades of residue- from super fine to coarse- and i have been down this road a fair way.
first off, those normal bag type extractors do an ok job, but not that efficient- they do put the warm air back in the shop, but the filter bags do not trap the super fine, really unhealthy dust.
those proper cyclones are the only way to go , in my opinion. you can do them in doors- most shops put them in their own insulated room- to help sound proof them, and as others have said you can put the motor, cyclone and debris bin outside- and the filters inside.
depending on your volume requirements- there are smaller options, very reasonably priced. check here
http://www.clearvuecyclones.com/ i also have access to plans for these, if you want to build one yourself- and you can build the high efficiency impeller too.
your deal does look like a very price though.