Hey Deanz, the storage space should become avaialble after flipping the Available Offline. Maybe try logging in and out or restarting your device after you've flipped the switch and seeing if the space becomes available then.
I love the feature that you are talking about and it does seem to solve everyone's problems. Unfortunately, the feature isn't available on all phones. I'm on a family premium account and I have the only phone with this feature in the group. I keep trying to figure out how to get it for the others, but am about to give up. It should be available to everyone.