Just passing through from the BA forum!

Correct, BA do fly to IST from Terminal 1 - twice daily

LHR - IST
10:20 - 16:10 BA676
17:05 - 22:45 BA680

IST - LHR
08:55 - 11:10 BA675
17:10 - 19:25 BA677

Equipment is either A320 or 757.

There is a big lounge at T1, but it is not a Terraces lounge, it's the old Club Europe style. Adequate, but IMHO not amazing. As the only AA lounge I've ever been in is the FL at LHR T3 (which was O.K but nothing special), it's a bit difficult to compare. There is a pretty decent mini-Terraces lounge at IST though!

BTW, for those that don't know, Terraces is BA's main lounge concept. It's pretty good!