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Transfers for MAD and LHR aren't that dissimilar: MAD is a huge airport so plenty of walking, the main saving being a Schengen transfer without security. LHR is potentially more compact, but you can't avoid security.
T3 has 3 lounges to choose from, soon to be 4, and provided you aren't doing this on a Sunday morning, you probably want to try the Cathay lounge. This is at least as good, if not better than the Dalí lounge, which in any case is now closed for a few weeks. If you are Emerald in particular, LHR T3 is a good place for lounges!
Personally I'd go for the cheapest option.