Hi, Robert.
Proxxon MF70 has become my benchtop tool, I've never removed it as I constantly use it, though I've never experienced the limitation of the Z axis. Frankly speaking, the size of this mill is a limitation on its own. Before investing in various upgrades think if the job you are planning to use will be worth spending $$.
The most valuable, and I think, the right decision for upgrade (in my case) was to replace the collet system to ER11 from USOVO, with the help of our member, as the company doesn't ship to the USA, I have acquired the new spindle wich supports ER11. I consider this upgrade the most valuable among others. This collet system gives you a broad variety of endmills to use as it ranges the colets sizes from 1mm to I believe 8. I have never used anything larger than a 6mm shank, and if using an 8 mm enmill you may damage the motor. Most of my endmills are based on a 4mm shank, and I still have hundreds of possibilities.
The next upgrade I would think of replacing the motor, a brushless motor would do the trick but... I couldn't find the same size, and other suggested motors required to raise the housing, and others to redo the spindle and change electronics so this idea bites the dust.
I did upgrade all of my axes X, Y, and Z with thrust bearings, this is a cheap and very effective upgrade. I said it is a must upgrade you should do even before the first use. It improves precision and makes operation much smoother.
So if you require the Z axis higher, I would consider a different mill to begin with. You don't want to invest $$ into a device that costs $350.00, IMHO