When I moved to this property, I bought an Oneida 1.5hp cyclone system (same as Steve's) for my dust collection needs. It worked as advertised, was very well built and was suited to my shop. When I expanded my shop and also added some larger machinery (14" MiniMax jointer/planer, etc), I upgraded to the Oneida 2hp Commercial cyclone. It's performance is outstanding.
I have a hood on an adjustable arm behind the lathe to use the DC system while sanding pieces. It's very effective and since I can position the hood right where it's needed, little dust escapes.