Recheck your calculation. The area you highlighted is about 1350 sf. Regardless, by doing that all of the rooms that used to be on exterior walls will now have no windows. The bigger issue is that roofs don't just magically expand - you might need an entire new roof to do this. And the addition would be the size of a small house, so expect it to cost what a small custom home would cost in your area. If you have that kind of money to spend on an addition and you want to move forward regardless, you need an architect. With just a basic floorplan outline as you have posted, no one here can help.

Painting is the last step in any reno project. Generally, paint color is chosen to work with the fabrics and upholstery. I would drywall over the wood walls for sure; that angled wood style is really dating things. In a new to you home, there can be lots of hidden issues to deal with. Foundations, plumbing, roofing and HVAC can impede the functionality of the home, but you can live with the form as it is for a few months while you work out any glitches, test out the kitchen, and see how your own furniture looks at different times of the day. I see a few items that I'd deal with right away. The railing on the loft appears not to be to code, and I would replace it with a pony wall or close that area in completely if it is to serve as a bedroom. Noise from downstairs will rise and disturb anyone sleeping there. The lighting throughout needs an upgrade. Back to paint; it is said (and you can test it out yourself) that a view shows best when surrounded by a dark frame. You might get white and black poster board, tape it around a window and check for yourself whether the view is enhanced by the color surrounding the window. That could be an influence when you get around to choosing colors, but don't neglect the fabric/textile aspect of the design. I understand that tile is the best flooring to conduct radiant heat, but you can also do that under Marmoleum, and Warmly Yours can install a product under carpet.

I think hiring an actual architect is much better than a designer. Many things have to taken into consideration when designing a home and that is best when an architect is involved from the beginning.In your case it is importnt to also think about aging in place .I aslo think you need to really think about how much space you need for your life style. Lots of people had a couple of kids in 1300sq ft. I am 76 and live in a 3200 sq ft house and honestly for the most of the year too big for the 2 of us.

Yes. Examine the humidity levels in your home. They should be between 30-60%, with no fluctuations beyond that. Humidity levels fluctuating accelerate the normal wood movement.