A smaller space like a balcony is fine while she's healing and shouldn't stress too much anyway. But I think it's much to small for a cat to live in permanently.
Indoors can be made into a good living space for cats, if they can go in (almost) all the rooms and you play with them every day (or they have a friend to play with).
Some cats will never be satisfied being indoors cats, but most can can live a good life indoors if you sacrifice a bit of your comfort to give them what they need to be fulfilled.
Can you let your cats have access to all the same rooms as you have? And put up high shelves for them to jump on so they have even more places to explore? Can you train them to walk in a harness?
I also think it's important to neuter the cats you take care of before letting them go outside or releasing them.