Thank you all for the replies! It's a bummer one can't make a home within a dungeon area (awesome that there are mods for it though), and thank you for the tip about the cave entrance and it's uses! @Eightball yeah, that was my thought too, to have a kind of raid free area with a pleasant little loading screen wall to identify home and the wilds. I tried, but like Fzanco said, it's unfortunately not possible to build a work bench inside the cave. And thank you for the spawn information, good to know I can clear a dungeon and keep it that way.
Thank you us271 for the spawn information and what can be placed inside! I actually ended up using the mouth of a troll cave as a "wall" for my first water side, double story house (now if only I know how to support the roof better)!
Thanks for the tips, Science Dog and Fazanco! I didn't think about using it as a minimalist shelter space, that's awesome! I'm using the water front house as an outpost close to the trader, but will definitely make more, smaller outposts using mouths of caves.