Sure it works with 0-27, when I was growing up I had plenty of those contactors and all I had was 0-27 track. It took a little patience on my part to get it to work right, but when I finally had it set up the way I wanted it worked pretty good. And I had it set up in my room on my carpet.
I am only fimilar with the Lionel postwar switches. The O22 family of switches turns the power to the coil off when it throws. The 153C contactor could be used to throw these switches. The 0-27 1122 switches use a momentary SPDT controller switch to operate them as the switch does not turn its self after it throws. I think using the 153C contactor to throw the 0-27 switches would put them at risk of burning up. Lionel did put out a diagram on how to wire a loop with two passing sidings where two trains could operate automatically in opposite directions. I think it was either in Model Builder or the Bantam paperback book. I could not lay my hands on a copy of it right now. Maybe someone elce might have a copy handy.
I have a friend who uses copies of the 153C he built for standard gauge to keep his trains spaced. It was very successful and he could run four or five trains at a time. He used the contactor to shut off a long stretch track behind the train that was on the contactor and had the contactors fairly close together. It was not fool proof and did require constant montitoring.
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