Reciprocity failure was only a potential problem with film, if very
short flash durations (~ 1/10,000 sec) resulted from using high power
flash close to the subject.  It doesn't seem to happen with digital.

If the 1/16 power setting is too high for the short distance and the
aperture in use, the shot will be over-exposed.  You can put neutral
density gel filters over the flash head to reduce the power.  A cotton
handkerchief folded double or quadruple will also reduce the light.**

A ring flash might be a good investment.  Nikon make the SB29 but
there are cheaper generic alternatives.  I use a cheap generic ring
flash for some macro work, either on its own or together with a
hammerhead flash gun or studio flash.

**Rather than asking questions, often the best thing to do is just try
it yourself.  With instant review (isn't digital wonderful?) you can
find the answers to these questions yourself in half the time it takes
someone to reply on here.  Armed with that knowledge, you can then
answer other people's questions rather than just asking them.  ;-)

Gee, why ask?  It can't be too hard to set up and try it, eh?
It isn't like taking a few shots is going to cost much...

For whatever it is worth, I've used a variety of older flash
units for macro work, often a lot closer than 2 feet.  A flash
that can be reduced to 1/64 power is nice, but even then there
can be problems in some situations.

It also happens that I use an old Sunpak 8r ringlight (the same
as was sold by Lester Dine, so there are lots of them available
at very low prices on eBay), which cannot be reduced to a low
enough power sometimes.  What I've done with it is cut out a
ring of paper to put around the flash to obstruct the light.  If
only a little is needed it can be white paper and will also
diffuse the light.  If it needs to be a lot it can be done with
thicker and/or darker paper.

As Floyd said:

1- try it, manual, lowest power and Auto.
I don't know your flash, but if you can "tell it" that the aperture is
larger than it actually is, that might lower the flash output somewhat
in Auto mode.

2- dampen it (paper, watch for color casts).  Instead of paper cut out
the translucent plastic top from a large can of coffee.  Cut out a ring
to the dimensions of the flash.  (Just make sure you don't overlap an
edge near the lens such that the lens sees lit plastic).

3- reciprocity failure is a film issue, not a flash exp./dist. issue.

Cheers,
Alan

Really, I would recommend that you chuck the SB20 and get the R1
close-up kit. Don't bother with the much more expensive R1C1 kit; all
that gives you is a controller which is of minimal use on the D70 and
no use at all on anything better. Your results will be much better than
any kludge you manage to put together with the SB20.