how close can I get to the fire place brick work? If the fireplace is built to modern Codes, the XPS and wood can go directly on the brick and above the fireplace too.

I didn't know you could have a window extend into a shower surround. We were planning on reframing and replacing a window in order to fit a stand alone shower and separate tub into our master bath. Leaving the window alone would be easier, cheaper, look better from the outside, but I would still worry about moisture. The whole impetus for this remodel was a water issue leading to rotten subfloors. I'm still keeping my fingers crossed about the health of the floor joists. As for the grout question, I think white would look better. Sealed properly, it will be easy to keep looking clean and beautiful. Grey will just look like it's dirty right from the start--just my opinion, with a little experience.

seattlepioneer: I'm well aware of the clearances to combustible materials as specified in the installation manual. That's not what I'm asking. I want to build a framed wall if you will, that surrounds the outline of the fireplace opening (but lower in height). This framed "wall" would extend to the double wall studs on each side of the brick. The whole wall would be faced with cement board and then portions of it covered in tile, granite or marble, then a mantel installed over that. Basically, I just want to extend the firebox out into the room about the width of the brick that was removed when we demo'd the fireplace hearth and face.

We are climate zone 5 & 4 (green) - thanks for the link! We do plan to use the rigid foam, seal around it, and then use mineral wool bats between the studs and as extra insulation in the rim joists (which will also have sealed rigid foam). I think this will bring us up to code. I would prefer not to use the spray foam. Our daughter is more chemically sensitive than the rest of us and I am concerned she will react to 3 giant walls full of spray foam. Looks like we will be ripping out the studs! Ugh! Thank you so much for the advice!