>> But I already agreed about adding a new arg to
>> 'after-display-function', and will add it anyway.
>
> OK.  To avoid confusions 'after-display-function' should be renamed to
> 'after-display-buffer-function' at least.

Are you sure about such long name?  This is not a hook, it's just
an alist entry along with 'window-height' and 'preserve-size'.

A good short name would be 'body-function' where 'body' has
two-fold meaning:

1. it hints to body of the former macro that it replaces;

2. body could also mean window body that this function fills.

Here is a completely tested patch that works in all cases: