Is there a way to have London gradually expand in pace with the actual urban area, rather than simply remaining confined to the square mile behind the walls? At least to the level of most pre-20th Century European cities?
I think the best way to do this would be to avoid Edward the Confessor's founding of Westminster Abbey. While Royal Palaces are still likely to be in the area, without that you remove the sense of an important rival seat of political and spiritual power just down the river from the City.
Have William I actually enter and defeat the city. It's rights were only conferred/confirmed when William the Bastard couldn't gain entry and he couldn't leave them against him when heading north.