I oddly experienced the same thing with a CD player in the 90's where the lack of isolation meant that a deep bass thump would actually cause the laser to lose tracking. Turning down the volume cured that.You are correct - these systems are totally and completely mis-matched to the size of the space (and it looks like a rather reverberant space at that). The multicell horns are also something which was designed for large movie auditoriums where it was important to get sound up into balconies and to every corner of the theater.
I have Altec A-7-500s in my 20' x 30' room, and they are pretty well sized for the space. All of the VOTT series speakers start to roll off around 50Hz, so I have four 18" JBL subwoofers to fill in the low bass region. I have a turntable in the same room about 10' in front of the speakers and I had to build a turntable mount on the wall otherwise there was excessive LF sensitivity to things like foot falls and if the volume was turned up high enough, acoustic feedback. The wall mounting of the turntable cures that problem.