Adjusting the index value shuffles them around so its possible. Its just a case of making the events organised enough that it doesn't get confusing or messy.
If you have 8 spots and you have a sword that takes up 4, and 4 different potions which take up 1...then how would you move the sword about? Would you just drag and drop it over the potions, and everything else would automatically shuffle to give the sword room ?
It would be exactly like in Diablo II... if you don't have slots available, you have to drop the item and reshuffle your inventory spaces to make room. A lot of people found that "annoying" but I find it in true RPG spirit... reordering your bag-o-goodies to shovel in one last treasure! You can always swap a smaller or same sized item for something bigger (or same sized >.>) but putting a larger item in place of a smaller one would require the spaces to be there already.
You could always make an "auto sort" function (like in Sacred 2) which arranges your inventory for "best fit".