I actually didn’t want to clarify or ask the question about the optimal location of the house or the floor plan here.
And you still don’t want to – unfortunately not even if that is the solution. You don’t want to see it because you have already grown too fond of the floor plan.
From your point of view, only such a stupid setback area stands in the way of your dream, so it must be exempted. And then "only" the excavator has to come and push earth around to waist height and cram it behind a retaining wall.
My view, on the other hand, is as follows: the only real development difficulty of your property lies in your unwillingness to rotate the building mass to fit the property. Be grateful for the building regulations framework: the restrictions on how much terrain one may reshape also protect the builders themselves – namely from having spent more money on landscaping in the end than on the actual house. Free yourself from the delusion that constant polar night reigns in the north quadrant of a property.
You think your development plan has errors? – You’re right, development plans are discussed by the decisive municipal councils as bird’s-eye view pictures. It is typical for hillside development areas that there are incorrect specifications of eave heights that do not work for at least a quarter of the lots. This should be corrected. However, what such a correction cannot do is to ensure that one can guiltlessly choose a property on the wrong side: there will be no official decree granting your property simply two south sides (just so that despite a south street you also get a south garden without having to invest in setback areas; or so that your floor plan fits without rotating and/or mirroring). Rotating the house axis against the property axis was your mistake and nobody else’s. The only effective remedy is therefore: rotate back. Being stubborn won’t get you anywhere here.
I had already told you the "political" way out, but I think you will still be grateful to your property that it supposedly stood in the way of your dream. What looks like a bitter pill will prove to be a path to the light.