Isn't the only upgrade that needs to be close to the forge, the Forge Bellow?
Wich even have to point towards the embers of the forge, to work, which makes perfect sense tbh.
Other upgrades can be put below ground, works fine with floors between them.

Originally posted by MrDugan:

I don't want to have to tear down literally half of it to meet the stupid requirements for where things are placed. Why not just let people place things where they want them?
And no, I'm not building a second forge just to place this damn thing, I'm already scrounging for materials as is.

Just like rl, the game doesn't adapt to all we'd like to build and place, and in all honesty, if you feel like getting ressources for a second whatever is a chore, get ready for a lot of chores.