However, what I'm wondering is if a unit is prevented from moving through a space if there are:
a) unit(s) already in the space and
b) the presence of those unit(s) would prevent the moving unit from physically fitting in the space.
It is, yes. Square units can stack, and overstack, but Long Units cannot, so, like you say,
7.3: "A unit may only enter or occupy an area into which it can physically fit"
I don't see any question on that one...