I have an X1 and so far I am very happy with it. The base price of $300 and the ease of resale (you can ship it UPS or Fedex, no truck freight) makes it the cheapest way to get into milling.
425oz motors are wildly oversized for the X1. I am direct-driving my X and Y using 125oz motors from an earlier wood router project. I am still working out backlash which is on the order of .005 but that is with no work on my part to reduce it. Aside from the CNC conversion parts I made it is 100% stock which made it a stupid-simple setup. I used the drawings on this site to build the X and Y bearing blocks and used cheap skate bearings instead of fancy thrust bearings. They are a great upgrade even if you use the handwheels instead.
http://www.theblossers.net/index.php...m449e9dbb67ef5
The Z axis is where you need power but a 200-300oz motor seems sufficient, especially with a belt reduction. I've been trying to move my Z with a 125oz motor (because it's what I have at the moment) but it's not quite enough by itself. All the bigger motors will get you are faster rapids which are meaningless on a mill this size, and of course more expense/heat/power issues. I drive mine with an $80 HobbyCNC pro board and a 24V PSU.
I am not sure what you mean by the "L" conversion. I do have the extended Y base from Little Machine Shop and will probably add the extended X when allow. These two mods push you up towards the base price of the X2 but you actually end up with more travel, particularly in the Y. The Y conversion is highly recommended as you get double the dovetail length for any given position which really helps rigidity and you need all you can get.
There is a Yahoo group called hf47158toCNC_Moderated which is dedicated to the X1. I would search there for more info on the belt mod.
Along with the belt drive, I've seen people put treadmill motors in these for more power. My feeling is that the existing motor can probably deliver as much power as the (limited) rigidity of the mill can stand up to, but I've never worked with one modded this way, so take it with a grain of salt.
I've also never worked with an X2 and am generally new to machining so I can't say how much better the X2 is. Anecdotally it seems like people who upgrade from the X1 either stick with a micro mill and go to a Sherline or Taig for the precision, or they go to a "small mill" like the X3 or RF-45.
Right now I am cutting 2D profiles in .500" cast aluminum plate--don't know the grade as I got it in the metal supplier's scrap bin cheap ($2/lb) but have cut plenty of 6061 using up to 1/2" end mills. I do these using XY-axis CNC only (as I'm still working out the Z) so I just run the profile, set the Z depth a little lower by hand, and run the profile again until I'm done. Without flood cooling you need to clear the chips constantly anyway, so no big inconvenience there. So yes, I am also working on flood cooling...
In my case the original choice of the X1 was driven mainly by the price and by the fact that I could CNC it using components I already had on hand. I also needed to carry it down a narrow basement staircase. If you're starting with nothing, the tooling for any of these machines will cost more or less the same. The good news is that tooling can mostly grow with the machine, so if you do upgrade, there's not much wasted. I've spent around $300 already and could easily do it again before feeling close to complete, though $200 is enough to get you started.