Hiya,

Technically it's my boyfriend who's into bonsai (hey, it's indoor work with no heavy lifting...) but he keeps roping me in to help. Without digressing too much Santolina (Cotton Lavender, not Lavender Cotton ;( ) does indeed respond well to hard pruning... I've grown it in my garden for five years now and whilst I've seen mature specimens that are enormous, I keep mine relatively small (clipped to a ball about 1ft across) by just being really cruel and hacking it back to the woody stems whenever I think it's getting too big. It does have small yellow button flowers, which are about 1cm in diameter, but I'm not sure if it would flower if kept as a small bonsai - usually it flowers when the stems are about 20cm long, and the flowering stems are produced on the ends of these (just like lavender, in fact).
Hope this is helpful.

Emma