My setup is very similar to the OP's. 10 lbs BIAB is about the max I can do in a 4 gallon pot. Leaving 1" of head space it only fits about one quart of water per pound of grain. My efficiency suffers because of it at around 60% even with a dunk sparge. It probably doesn't help that I like a high wheat percentage on my beers either. Steeping the specialty grains is a good idea as well. It will reduce your ferment-ability a little, so if you want a little more sweetness this will work in your favor.