Restore TimeMachine on “smaller” hard drive

Recently my Mac died and I have been temporarily using a loaner Mac. The loaner has a 1TB SSD, whereas my Mac has only a 250GB SSD. I restored my TimeMachine backup onto the loaner Mac, and chose the option to “take over” the TimeMachine backup in order to maintain backups of my files while my Mac was in the shop getting repaired.

Now I have my Mac back, and to make things simple I thought I’d just do a TimeMachine restore on my Mac. Unfortunately, when selecting my TimeMachine backup, I get the woeful message:
“This disk does not have enough space to restore your system”

Black screen on retina MacBook Pro and restore TimeMachine from NAS

In retrospect I should have seen it coming. I have an external monitor at work plugged in via displayport, the other port connected to my thunderbolt ethernet connection. Once while accidentally jiggling the ethernet adapter my screens went black for a second (looked like the resolutions needed to refresh or something, screens went black, then came back a few seconds later). Freaked me out, but the displays came back. Anyway, as I said, I should have taken that as a sign that something wicked this way was a comin’.

Fast-forward a month or so. Before work, morning coffee in hand, open the lid, login prompt appears. I get an SMS on my phone, so my attention diverts. Read the SMS, reply, etc. A few minutes later I go back to my Mac, the screen black as usual, as it has powered down since I didn’t log in for a few minutes. Or so I thought. No amount of key presses, opening-and-closing of the lid got the screen back to life. The keyboard backlight was on, I knew the Mac was on. Close lid, wait a few minutes, open lid. No screen. Ok, power off and reboot. No screen. At all. Ok crap. Starting to stress now as I will be late for work if I don’t leave soon. Scramble in the cabinets, looking for any monitor cables. Found an HDMI cable. Plugged the Mac into the TV. No video anywhere, black on both screens. Ok, reset PRAM (command-option-P-R at boot). Nope. Reset PRAM a dozen times. Nope. Reset SMC (left shift-control-option-power). Nope. Reset SMC a half-dozen times. Nope. Still black screen.