I've flown several times with them from LA to Madrid. The layover in Heathrow can be a nightmare but better then Gatwick. They have lost our luggage the last 5 times out of 6. I, too, have had the same luggage story of finding my own luggage days later in Barajas.
We use them for their great frequent flyer club that lets you use points and gather points for the whole family, so we have flown on free tix before.
Now that Iberia flies direct from L.A> we are never going back. It's worth the higher price to fly direct!
When are you going?