I've got a 3 gallon tank that has been up for about 2 months now. I have around 3 pounds of LR, 6 pounds of LS, and a slew of mushrooms, zoas (7, maybe 8 kinds...anywhere from 8 to 35 of each kind), branching hammer, toadstool (about 2 inches around), 5 headed candy cane, GSP, and a red monti cap. It has been going pretty strong, with growth on everything. I top off the tank with freshwater at least daily, if not twice daily. I do 3-5% water changes at least 2 times a week, sometimes up to 4 or 5 times a week. I've just started feeding some cyclops/brine to the candy cane and hammer coral. I have also be using reef builder/reef buffer depending on the pH with my freshwater top offs.
As for filtration, I took out the stock filter material from the HOB and filled it with LR rubble. Then I went to Kohls and grabbed a half dozen of the little fake socks for trying on shoes and put about a tablespoon of carbon in it, tied off the top, and dropped it in with the LR rubble.
I have to say, the only thing I'd do differently would be to buy a nano that can accommodate a glass top to reduce evap.