I have done it.
I have put duallys on corollas, civics & crxs, sentras, and a bunch of other small cars.
(Damn, I knew I should have taken pics of them...)
Sorry, but this may get to be long...
To answer your questions:
No, Toyota did not leave the space open for an exhaust (its actually not big enough for a factory set up anyways).
It provides NOTHING other than looks. Dep on how it is made, it may take away from the performance.
If you do not have access to welding equipment and a pipe bender, do not do it by yourself. I used to do this for a living on the weekends, and depending on how well you want it to work, it took me upto 10hrs to do (if its just a hack job, i could put it out in a couple hrs.).
BIggest pain of a dual system is getting the 2 sides to line up... I usually spent 30-60min adjusting the height and amnt of overhang.
Unless you have some sort of rear skirt (aftermarket bumper), I do not recommend it. There is very little space to work. Therefore, the car behind you can see all of the pipes bent around.
The OE dual systems look "cool" b/c all you see are teh tips coming out. When you can see all the pipes, its not very clean.
As for cost, a hack job that i would do in a few hrs, was a couple hundred + parts.
A well designed one, I think the nicest one I did was about 800 + parts.
Whats teh difference?
hack job - I cut off the old muffler, patched in a Y-joint. One side I welded in the new muffler, and plumbed the pipe to the other. Result, the side with the shorter pipe gets more carbon deposits than the other. Also when the car is cold, smoke comes out the side witht he shorter pipe, and very little comes out the other.
work of art - spent hours cutting, bending, and re-cutting, rebending pipes that that both sides would have a balanced amount of exhaust coming out.
BTW,
If you put on bigger pipes on a corolla (i.e. 2" or more), you will prob lose torque.
I dont understand all of the physics behind it, but on a N/A car, you need some back pressure for maximum efficiency of the engine.
So, you may increase your HP by switching to a larger diameter system, but unless it is designed specifically for your car, you will most likely lose torque.
Another choice may be to have it come out in front of the rear tire... not sure if there is enough space for taht either...
good luck.
tdk.