Can AI replace n8n Cloud?

Build me a self-hosted n8n setup to replace n8n Cloud. Requirements:

- Do not rebuild the tool, n8n is open source. Set it up properly on my VPS instead.
- Docker Compose: the official n8n image with SQLite storage (fine at personal
  scale, skip Postgres), a named volume for /home/node/.n8n, restart
  unless-stopped.
- n8n binds to 127.0.0.1 only, published through my existing reverse proxy on an
  HTTPS subdomain; n8n's own user management guards the editor.
- Set N8N_ENCRYPTION_KEY explicitly in .env and tell me to back that key up
  separately. Losing it orphans every stored credential, say so loudly.
- Webhook env vars (WEBHOOK_URL) set to the public subdomain so external services
  can call my workflows.
- Nightly backup script: export workflows and credentials with n8n's CLI plus copy
  the data volume to backups/YYYY-MM-DD/, keep 14 days.
- An update script that pins a version tag, backs up first, then pulls and
  restarts. Never run :latest blind.
- Import two starter workflows as JSON smoke tests: an RSS-to-email digest and a
  webhook-to-Telegram alert.
- Out of scope: multi-user teams and high-availability scaling. This is one
  person's automation box.
- README: first-boot owner account, a backup restore drill, and the update
  routine. Ops is the subscription being replaced here.