Your problem is not the size of the rads, but the fact that your roomstat is in the wrong place.
As for the location of the room thermostat. It doesn't matter where it is
Well it's tricky to decide what to do with completely contradictory advice!
Well, one comes from an experienced engineer who makes a living out of doing this stuff, the other comes from somebody who has never installed a boiler in his life.
Maybe that makes the choice easier.
If it doesn't, you could ask yourself if the location really does not matter. How effective would it be to have the roomstat in an spare room used for storage?
If you still don't know, just gamble; any action is better than no action.
I've blocked up the chimney and balanced the rads since that costs nothing.
That alone could make a huge difference. Don't forget to do the obsolete vents.
Next is to either get the walls and floors insulated or get TVRs fitted and move the thermostat. The arguments for insulation, thus reducing the heat requirement of the lounge seem more logical and compelling.
This may be a good time to replace the old mechanical stat with a modern digital programmable roomstat.
Much more convenient than the old system, more versatile too. Wireless models for about £30-£50 more than hardwired type. Makes the installation quick, easy and a lot cheaper than hardwired version.
Various subsidies available for insulation, worth checking out carefully as not all are as good as they seem.