Yes, the size of the library will only reduce once you remove everything from the recently deleted folder.
Are you deduplicating in your own library or is this for a client? I never remove anything other than duplicates and I leave the similar ones alone because it takes ages and if they are not my photos, who am I to decide what to keep and what not.
My top priority for the auto mark is always size, then keywords, then metadata. I remove all the other ticks. Having said this, sometimes I would keep the smaller one if the difference is not bit and the smaller one has better metadata.
My workflow is looking for duplicates first. Then I start tweaking the settings very slowly. Eg I would use a time gap of 1 second only to start with and then – if necessary – slowly work your way up.
In short: I use PhotoSweeper to remove duplicates and if it’s my own photos, I prefer to remove duds by simply going through the feed. I don’t remove similar ones for clients.