here in buffalo ny the first floor has baseboard radiators, the second
and third floors have old fashioned radiators. the boiler is from 1990.

sounds just like our house next door. here's some of what i learned
since 1978:
1. first insulate the house [oops we didn't include the basement]. all
radiators must be inside insulated walls and heated in winter or they
will freeze and break like one of mine in a back stairwell when we
turned off its supply line in the basement to save money. you will now
have to shovel snow around the house since you are not warming up the
walkways with your warm basement like i am. but there are less icicles
forming on the gutters from wasted heat rising into the attic.
2. your basement may have comfortable but waste heat from all those
properly sized pipes for your radiators without modern insulation on
them. if you do what you suggest it will get cold down there and you
won't need any headroom because you will be living upstairs in the
comfortable insulated and heated habitable area of the house.
3. if you are going to reduce the amount of water in your system it
will affect the way your system operates. your local hvac guy will be
trying to figure this out to adjust the boiler for this and considering
your tankless boiler.
4. if you are thinking of replacing cast iron radiatiors stop now. it
takes wall to wall baseboards full of modern radiator piping to replace
a big hot old radiator.
5. add as many zone valves and zones and thermostats as you can afford
if you update your system. we changed from 2 to 4.
6. hang a copy of your boiler manual and the manual for every component
of your system that you searched for at www.google.com and printed out
by the boiler but above flood level. also list your annual maintenance
steps that you perform regarding the expansion tank and so forth at the
end of each summer.

i found basement insulation info in great detail at:
http://www.buildingscience.com/resources/basements.htm