What kind other equipment are you talking about? If you use a smaller kettle and fermenters, I think you have eliminated the two main concerns. Like someone said, it might be harder to maintain temp in a cooler MLT but only a little harder.
I just mash in a pot with a bag for 1 gallons. I use a cooler for 2+.
If you're used to mashing in a cooler, you could make a smaller MLT with a 2 gallon cooler if you wanted. I have thought about that. You wouldn't even have to add a spout, just do it in a bag in the cooler.
I hadn't thought about maintaining temps as a problem. I don't plan to make 1 gallon batches a normal thing, so I probably won't make a 2 gallon MLT.
I know the one thing I had to do with my 5gal cooler was to put a piece of tinfoil over the mash to keep the heat in. Not real sure how that'd go with the 10gal - that and the ratio of the grain bed would be a little off (if following the example from "How to Brew").
A 2gal cooler is pretty cheap, I'd probably grab one if you see yourself doing more 1gal batches.
In other news - rye is on hold, decided to brew an ESB. Grains ordered for pickup tonight, hope to brew this weekend!
(and bottle for that matter... why is brewing more fun?)
Thanks for the tip!