Actually, the Imperial has the lobby exactly as the original owners wanted it when it was built - non existant. They really did want people milling about in the narrow, crowded street. It created an instant buzz; made you feel like you were part of an event. And of course, everyone was dressed up back then, so every night was like The Tonys.
Imagine the excitement on 44th, 45th and 46th street back then, with the amazing concentration of theaters in those few narrow blocks. Wow!
The other salient point was that lobbies were viewed as wasted space. In most cases, the lobby tunneled through to the premium street footag, while the theater itself was built back away from the street, where property values were cheaper.
And speaking of cheap. I have been told that The Brothers Shubert turned off the water in the fountains after intermission because the feeling was, "Hey, we gave them a good show and an intermission. That's all we owe." It may be an apocryphal story but it's funny.
http://www.broadwayworld.com/board/readmessage.cfm?thread=972787#3631451
http://www.broadwayworld.com/board/readmessage.cfm?thread=963561#3533883
http://www.broadwayworld.com/board/readmessage.cfm?thread=955158#3440952
http://www.broadwayworld.com/board/readmessage.cfm?thread=954269#3427915
http://www.broadwayworld.com/board/readmessage.cfm?thread=955012#3441622
http://www.broadwayworld.com/board/readmessage.cfm?thread=954344#3428699