Why not use Google Photos? You get unlimited photo backup with some slight downgrade in quality, but it's unlimited unlike iCloud storage. And Google Photos has a setting to automatically clear space on your phone. It checks if the photo is backed up to your account then it removes it from your phone.
Yeah, this is something Apple needs to address with iCloud. If I'm backing up photos to iCloud, give me the option to purge at least some of the older shots from my devices.
At least Apple is moving toward higher baseline phone capacities. Let's just hope we don't get stuck at 32GB for the next 5 years (probably won't, because storage demands are accelerating).
I also use Amazon's Prime Photos in addition to Google Photos. I do not see any option to remove locally stored photos in the app (on iOS anyway).