Dear Y. N.…
The key factor here is that your agent gave the writing itself a thumbs up. She’s not afraid this project will hurt your reputation; it’s clearly a numbers thing. Knowing that, I say do your round of smaller press submissions. A small press isn’t as dependent on huge yearly sales as a Big House (although they’d sure love to score huge sales) and so may be that risk-taking house you’re looking for. Either you’ll get a book deal (yay!) or you’ll get peace of mind that you’ve given this story a shot at the bound cover.
My concern would be that contract. It’s an odd contract that allows an author to market the book herself and the agent not expect a commission from future sales of it.
But I wholeheartedly agree with going to the smaller presses. They are more open to subs that aren’t so mainstream, and they sign with an author, hoping the author will be theirs for the long haul, in a symbiotic relationship. But I’d get something in writing from the agent that clarifies she isn’t expecting commissions from what she hasn’t sold.
Having the permission in writing is a good idea, C. Hope. It’s not unheard of for agents to agree to a different arrangement when a particular project warrants that, but making it official is a smart way to make sure nothing funky arises out of this in the future.