I understand - this is one of the compromises that you encounter when you opt for a smaller lathe. Because it's smaller, the key parts are simply closer together so there is less space available to maneuver.
Something you might consider is getting (or making) a shorter tool rest. The picture shows a standard 6" tool rest, which means that the first problem you are going to have is getting it close enough to the workpiece while fitting between the headstock and tailstock. A shorter tool rest might enable you to get closer to the work while providing more maneuvering room to manipulate the locking handle. I made a short (3") tool rest from a piece of 2" steel angle and a length of mild steel rod that fits into the banjo. Ideally, the angle should we welded or brazed to the post, but I just drilled and tapped a hole in the post, and then used a screw to hold the bar in place.
Another thing to consider is to extend the tailstock ram. That will allow you to move the tailstock further away from the headstock to free up space in the congested area. Having done that, you might be able to then position the banjo at an angle to the bedways (it doesn't have to be exactly perpendicular) which then might allow more space for the locking handle.