Somewhat similar story here. I started off, however, inheriting my grandfather's postwar O27 gear, in 2002. He had O27 track and all engines could handle those tight 27" curves. My Uncle had the taller O (with 31" curves, O22 switches) and few larger-than-O27 engines like the Virginian FM Trainmaster and Santa Fe F3s. That was all I understood back in the 70s and 80s, but, in today's vernacular, both of them had traditional or semi-scale.
In 2002, I bought a conventional O27 Junior Berk and conventional O27 Santa Fe FT set from my LHS to add to my grandfather's gear. My brother-in-law decided to get into the hobby, but he started right off with scale and TMCC. Once I saw TMCC, I had to have some and, much to my delight, there were O27/traditional engines with TMCC, so I stayed with the smaller, less expensive gear. Even added a LionMaster engine around 2010 since I had added 42" O27 curves to my layout, further blurring the lines.
As you can see from my user name, I've got 4 girls. In 2013, I tore down the basement layout since the girls wanted more basement space for parties, etc. when home from college. In return, I got a bedroom for a smaller layout. since most of the time they were away. Lasted just a few years. Now 2 are out of the house, and I'm back to the basement facing the "go scale, etc." dilemma like you.
First consideration is cost. Third daughter just finished college, and I took out a 2nd mortgage to cover their tuition, so making a complete changeover to scale with $1,000 - $2,000 engines and $100 per piece rolling stock simply isn't in the budget. Then there's the question of appearance. My layout is still relatively small as we don't have a full basement. Traditional-sized is going to look better. And, of course, while I like the items I've purchased, my grandfather's collection is the heart of collection, and it's all traditional, so in homage to him, I want everything to look right together.
The new layout has nothing less than 42" curves, many 54" and even some 72", but I decided to stick with tubular O27 low-profile. I can easily handle some of the scale gear. Question is whether I should.
I have the same concerns as you about traditional. Why is my Junior Berk smaller than my traditional Pacific or my Williams 4-6-0? It's an outrage! Remember, however, that no one else notices!
To get closer to reality in size and to get 4 chuffs per revolution, I decided to add MTH DCS (perhaps ill-fatedly) to this layout right before they declared going-out-of-business. Not sure if I'll end up regretting that, but it DID open the door to some more motive power. To start, I picked up a Rail King Imperial Berk which is now my largest steam engine as a Berk should be (with no articulateds). The Rail King Imperial line up is huge compared the newly-introduced LC+2.0.
If you want to stick with Lionel and traditional, you can go with a used LionMaster with TMCC. My Hudson is gorgeous and is 22" long with tender. Lionel also made the traditional, not O27 Berk, like the PW model with TMCC and later with LC+. I think those are 21" long, a good 10% bigger than the Jr. Berk. If you go MTH, I think the Rail King Mikado is also bigger than the Jr. Mikado offered by Lionel.
Good luck with your decision.
