Would it be possible to make a Diablo 1 trading forums for both items and services? Would be fun to try out and play together both in Co-op and help out each other.

The bnet for D1 isnt working anymore afaik

It definitely was when I checked ~1 year ago.

However, the community is extremely small and I'm not sure if the number of players would warrant a subforum being created.

This will not happen. D1 items are stored locally on your computer and possibility to dupe/edit those items is too big, therefore trading of legit items would be only a wish.
Hope that explanation is understandable, if you have further questions pls pm me.