If you do not specify fill_factor or reservepagegap, rebuilding an index requires additional space of approximately 256 pages, or less in the data segment. The amount of log space required is larger than that required to drop the index and re-create it using create index, but it should be only a small fraction of the actual index size. The more additional free space is available, the better the index clustering will be.
reorg rebuild may not rebuild those parts of the index that are already well clustered and have the desired space utilization.