If I understand what you were saying the proposed unit would be in the middle of the house in a 1.500 sq ft basement? Also the main floor is 2,600 sq ft. No coal stove is going to heat that much space on it's own, unless of course you just want to keep it above freezing.
It can certainly reduce the reliance on whatever heating system you have. The inserts I have seen are usually less than 65,000 btus, you really want at least 85,000 btus as long as there is away to circulate the heat between floors and to the far reaches of the house. Some of the units Jpen mentioned are of this size.
As Jpen said Jerry, the owner of Leisure Line is a member of this forum and has a special section. He is a super helpful guy and might have some ideas for your particular situation.
In answer to your question about installing an insert vs a stove. I would suggest that stove is better suited to your large area and higher heat demands.
Your situation is not an easy one to solve, but with a little patience and listening to ideas from the members you just might find a decent solution.
Hope this helps a little.