Any question answered...

What size do you think my pannier mounting lugs will take. Not M5 methinks, as this is an old 1950s british frame and they would not have had metric then. Would they?

Could be 2BA (4.70mm × 0.810mm) , but M5 (5.00mm × 0.800mm) screws go into worn 2BA threads well enough that you won't really be able to tell without precision measurement. There is also a similar size (but not shape) BSC (C=Cycle) thread 3/16"×32tpi (4.76mm × 0.794mm) which again is close enough to M5 that a 60 year old mudguard eye is unlikely to resist the entry of a modern screw.

Derailleur adjusting 1 - is it possible to get a 2 x 8 to work through all the rear cogs without having to trim the front?

Unlikely, although it depends on many factors you haven't described. Not worth chasing after it though, chain rub is God's way of telling you to stop cross chaining

Derailleur adjusting 2 - again, wondering how long to spend on this. Should I be able to rotate pedals backwards without the chain snagging in every front/rear chainring/cog combination.

No. Never pedal backwards on a dérailleur equipped bike, it's asking for trouble

I want to put the freewheel which is transmitting the most torque onto the most thread... and the least the least. My thinking is that would be the largest freewheel (most teeth, 21), transmitting the most torque on the freewheel side, and the smallest freewheel, (16t) on the track side. Am I wrong?

You're right for the wrong reason. It's not that the 21 has more teeth than the 16, it's that the (unstated) transmission ratio is lower (unless you're doing something very odd)